Korea's First ETN Investing in 'Chicken' to Be Newly Listed

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[Asia Economy Reporter Myunghwan Lee] An exchange-traded note (ETN) investing in the theme of "national snack" chicken will be listed on the domestic stock market.

The Korea Exchange announced on the 15th that Shinhan Investment Corp.'s "Shinhan FnGuide Chicken ETN" will be listed on the KOSPI market on the 17th.

This product is based on the "FnGuide Chicken Index." The index selects 10 stocks highly related to the chicken industry from the KOSPI and KOSDAQ markets as underlying assets.

The underlying index consists of 4 KOSPI stocks including Kyochon F&B and Farmsco, and 6 KOSDAQ stocks including Harim and Hanil Feed. At each regular revision in June and December, FnGuide, the index calculation agency, evaluates the correlation between the constituent stocks and the chicken industry based on securities company reports and business reports from the past year.

A Korea Exchange official explained, "With the westernization of eating habits increasing per capita chicken consumption, the rise of single-person households, and the well-being trend, demand for chicken-based home meal replacements is also growing, so the growth potential of the chicken industry is viewed positively. This will provide a new investment tool that allows investment in companies related to the familiar theme of 'chicken' to the public."

This ETN is composed mainly of small and mid-cap stocks with somewhat high volatility in the underlying index, so early redemption conditions apply. If the real-time indicator value of the ETN falls by more than 80% compared to the previous day or if the indicator value at market close is below 1,000 KRW, early redemption before maturity may occur.

The exchange plans to provide underlying index information through the issuer or the Korea Exchange website for investor convenience.