Rapid Growth of Shipbuilding, Defense, and Nuclear Power ETFs
High Returns Attract Market Funds
New ETFs Launched for Investment in China’s AI-Related Industries
In the domestic stock market, stocks related to shipbuilding, defense, and nuclear power?collectively referred to as "Jo-Bang-Won"?are taking the lead, and related exchange-traded funds (ETFs) are posting high returns. As market funds pour in, these ETFs are establishing themselves as large-scale funds with net asset values exceeding 1 trillion won.
According to financial information provider FnGuide on June 19, the net asset value of the 'PLUS K Defense ETF' surpassed 1 trillion won for the first time since its listing on January 5, 2023. The fund's net assets increased by 730.8 billion won this year, reaching 1.0417 trillion won as of June 16. This marks the first time that an ETF launched by Hanwha Asset Management has exceeded a net asset value of 1 trillion won.
As of June 16, the ETF has delivered a return of 172.5% so far this year. During the same period, the KOSPI rose by 22.8%. Individual investors have been actively buying the ETF, resulting in a cumulative net purchase of 134.8 billion won.
Choi Youngjin, Executive Director at Hanwha Asset Management, explained, "The world has turned into a potential conflict zone due to events such as Russia's invasion of Ukraine and the military clashes between Iran and Israel." He added, "The growth of the domestic defense industry is not a temporary trend, but rather a result of structural changes in the international order."
Hanwha Asset Management executives and employees are taking a photo to commemorate the net asset value of the 'PLUS K Defense ETF' surpassing 1 trillion won.
The 'SOL Shipbuilding TOP3 Plus ETF,' launched by Shinhan Asset Management in October 2023, also recently surpassed a net asset value of 1 trillion won. The fund more than doubled from 480 billion won at the end of last year. Its return so far this year stands at 77.5%, while its cumulative return since listing has reached 196.8%.
This ETF began to attract significant attention as major shipbuilders returned to profitability. Last year, it posted a return of 60.8%, the highest among domestic equity ETFs. During the same period, the KOSPI fell by 9.63%.
Kim Junghyun, Head of the ETF Business Division at Shinhan Asset Management, explained, "Positive factors such as strengthened cooperation between major domestic shipbuilders and the United States and increased demand for special-purpose ships are adding momentum." He added, "Investors are recognizing the medium- to long-term growth prospects of the domestic shipbuilding sector."
Nuclear power-related ETFs are also gaining popularity. The net asset value of the 'HANARO Nuclear Power iSelect ETF' surpassed 2 trillion won just three weeks after exceeding 1 trillion won on May 26. This ETF, launched by NH-Amundi Asset Management, invests in 20 major domestic nuclear power-related companies, including Doosan Enerbility, Hyundai Engineering & Construction, LS Electric, Korea Electric Power Corporation, HD Hyundai Electric, and Hyosung Heavy Industries. As of June 16, its six-month return was 90.2%.
Kim Seungcheol, Head of ETF Investments at NH-Amundi Asset Management, commented, "Investments in nuclear power generation, triggered by global investments in artificial intelligence (AI), are expected to continue for several years." He added, "Recently, earnings forecasts for domestic nuclear power-related listed companies are being rapidly revised upward, so valuation pressures are unlikely to be significant."
The size of the domestic ETF market has surpassed 200 trillion won. The total net asset value of ETFs doubled in just two years, from 100 trillion won in June 2023. This growth is the result of major ETF managers quickly launching products that investors want. Recently, the domestic asset management industry has been rolling out ETFs that build portfolios around AI-related companies in China and Hong Kong. Jung Hyun, Head of ETF Management at Mirae Asset Global Investments, said, "Companies with global competitiveness are emerging, backed by the Chinese government's strong policy support and aggressive investment in technology." He added, "Now is the time to pay attention to platform companies and AI service providers, which are at the core of the AI value chain."
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