12 Value-Up ETFs Listed on the 4th
Most Close Up by Around 2%
Supply and Demand Effects Expected from Value-Up ETF Listing
The value-up exchange-traded funds (ETFs), which attracted market attention, made a favorable start by rising on their first day of listing. The market expects the listing of value-up ETFs to serve as a momentum for a shift in supply and demand.
According to the Korea Exchange on the 5th, all 12 value-up ETFs listed the previous day closed with gains. KODEX Korea Value-Up rose 2.65%, TIGER Korea Value-Up 2.53%, RISE Korea Value-Up 2.71%, ACE Korea Value-Up 2.60%, KOSEF Korea Value-Up 2.60%, PLUS Korea Value-Up 2.49%, HANARO Korea Value-Up 2.60%, and 1Q Korea Value-Up 2.60% each increased. Except for TRUSTON Korea Value-Up Active (1.33%), all showed strong gains in the 2% range.
The Korea Exchange listed 12 ETFs based on the Korea Value-Up Index (9 passive and 3 active) and one exchange-traded note (ETN) the previous day. The total listing scale amounts to 511 billion KRW. The 9 passive ETFs operate similarly to the fluctuations of the underlying index and differ in whether they pay dividends (PR) or reinvest without dividends (TR), as well as in dividend payment frequency. The 3 active ETFs use the Korea Value-Up Index as a benchmark and pursue excess returns through each company's unique active management strategies.
There is analysis that the listing of value-up ETFs is expected to have a supply and demand effect. Jin-young Kim, a researcher at Kiwoom Securities, said, "While the domestic stock market continues to underperform compared to the global market, attention is focused on whether the 12 value-up ETFs can once again act as a growth engine for the market." He added, "Although some of the stocks included in the value-up index have already reflected policy expectations in their prices, the simultaneous launch of 12 ETFs and large-scale fund execution through corporate value-up funds are expected to have an effect from the supply and demand perspective."
Yuan Park, a researcher at KB Securities, said, "In the context of the domestic stock market recording poor returns amid continued overselling of Samsung Electronics, the launch of value-up ETFs could be a momentum for a shift in supply and demand." However, he noted, "Looking at the case of Japan, which is used as a benchmark, the fact that funds did not flow in strongly after the launch of value-up ETFs is a concern. This is because the value-up thematic rise momentum was already priced in the stocks composing the ETFs." He added, "Market attention will focus on the initial fund flow immediately after the listing of value-up ETFs."
Last month, the Korea Value-Up Index recorded a monthly return of -0.79%, outperforming the KOSPI (-1.43%).
The supply and demand effect is expected to be more prominent in companies with relatively lower market capitalization or trading volume rather than large-cap stocks. Dong-chan Yeom, a researcher at Korea Investment & Securities, said, "Because there is a limit on the weighting of ETFs, the supply and demand improvement effect for large-cap stocks will not be strong." He added, "For companies with relatively low market capitalization and small trading volume, a more favorable effect from the supply and demand perspective can be expected."
The listing of value-up ETFs is expected to lead to increased investment in companies participating in the value-up program. Researcher Kim said, "Since the exchange has announced plans to sequentially develop various follow-up value-up indices, this will lead to the launch of ETFs with more diverse strategies, satisfying investors' demand in multiple ways." He concluded, "Ultimately, the launch of value-up ETFs will contribute to revitalizing investment in companies participating in the value-up program, revaluation of value, and spreading efforts to enhance corporate value across the stock market."
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