Concerns Over Power Shortages Persist... Nuclear Power ETFs Soar

HANARO Nuclear Power iSelect ETF Surges 210% This Year
Growth Prospects for Korea's Nuclear Industry
Mirae Asset Lists New TIGER US AI Power SMR ETF

Nuclear energy-related exchange-traded funds (ETFs) are drawing attention in the domestic stock market as they have recorded high returns. With the advancement of artificial intelligence (AI) technology, concerns over power shortages are also growing. The domestic asset management industry predicts that the nuclear power sector will continue to grow, as carbon neutrality and energy security have emerged as key policy agendas for major countries around the world.

According to Koscom ETF Check on November 4, the HANARO Nuclear iSelect ETF has posted a return of 210% so far this year. Even considering that the KOSPI rose by 76% during the same period, its return outperformed the market by 134 percentage points (P).

The HANARO Nuclear iSelect is the first nuclear-themed ETF launched in Korea, introduced on June 28, 2022. It invests in 20 key domestic companies related to nuclear power, including Doosan Enerbility, Korea Electric Power Corporation, HD Hyundai Electric, Hyundai Engineering & Construction, and Hyosung Heavy Industries.

Kim Seungcheol, Head of ETF Investments at NH-Amundi Asset Management, explained, "There are high expectations for the overseas expansion of domestic nuclear power plants based on cooperation with the United States," adding, "Now is the right time to invest in the domestic nuclear power sector." He further stated, "The surge in electricity demand driven by AI investments will further highlight the strengths of Korean nuclear companies," and predicted, "Korea will play a crucial role in the global nuclear supply chain."

Among the nuclear energy ETFs listed on the domestic stock market, products such as ACE Nuclear TOP10, RISE Global Nuclear, and PLUS Global Nuclear Value Chain are also outperforming the index.

The ACE Nuclear TOP10 ETF diversifies investments across about 25 domestic companies to reduce individual stock risk while benefiting from the overall growth of the nuclear power industry. Nam Yongsoo, Head of ETF Management at Korea Investment Trust Management, said, "Reflecting the achievements of Team Korea in the Czech nuclear project, including Korea Hydro & Nuclear Power, Doosan Enerbility, and Daewoo Engineering & Construction, the ETF is recording high returns." He added, "The rebound in the stock prices of Doosan Enerbility and Daewoo Engineering & Construction, driven by the increase in overseas construction orders in the third quarter of this year, has had a positive impact."

The RISE Global Nuclear ETF has built a portfolio of key companies with competitiveness and dominance in the nuclear power industry, both domestically and internationally. It allows investment in companies with significant growth potential across the entire nuclear value chain.

Although nuclear-related ETFs have risen sharply this year, there are still investment opportunities. Sung Nakhyun, Manager of ETF Business at KB Asset Management, explained, "Recently, the price of uranium, the raw material for nuclear power generation, has been rising due to supply constraints and other issues," and added, "We expect profitability to improve across nuclear-related companies."

Woo Jongpil, ETF Portfolio Manager at Hanwha Asset Management, also predicted, "The United States is accelerating supply chain independence in nuclear power generation by injecting large-scale budgets," and added, "The importance of the nuclear value chain as the energy backbone supporting power infrastructure in the AI era will become even more prominent."

Mirae Asset Global Investments has newly listed the 'TIGER US AI Power SMR ETF.' It provides investment opportunities in companies involved in the design, fuel, and operation of small modular reactors (SMRs), such as NuScale Power and Oklo, as well as power plant operators specializing in data centers.

Kim Namho, Head of Global ETF Management at Mirae Asset Global Investments, analyzed, "With the recent spread of generative AI, electricity demand from data centers is increasing explosively," and predicted, "The power required for AI computation will increase 3.5 times over the next five years."