Important Information
Investors should not base investment decisions on this website alone. Please refer to the Prospectus for details including the product features and the risk factors. Investment involves risks. There is no guarantee of the repayment of the principal. Investors should note:
- The investment objective of Global X K-pop and Culture ETF (the “Fund”) is to provide investment results that, before fees and expenses, closely correspond to the performance of the Solactive K-pop and Culture Index (the “Index”).
- The Index is a new index. The Index has minimal operating history by which investors can evaluate its previous performance. There can be no assurance as to the performance of the Index. The Fund may be riskier than other exchange traded funds tracking more established indices with longer operating history.
- The Fund is subject to concentration risk as a result of tracking the performance of a single geographical region or country (South Korea). The Fund may likely be more volatile than a broad-based fund, such as a global equity fund, as it is more susceptible to fluctuations in value of the Index resulting from adverse conditions in South Korea. The value of the Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the South Korean market.
- The Fund’s investments are concentrated in companies in various industries and sectors including entertainment, communication services, internet, gaming, consumer staples, consumer discretionary as well as food. The business performance of these industries or sectors are subject to a wide range of risks. Fluctuations in the business for companies in these industries or sectors will have an adverse impact on the Net Asset Value of the Fund.
- The Fund may invest in small and/or mid-capitalisation companies. The stock of small-capitalisation and mid-capitalisation companies may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general.
- Underlying investments of the Fund may be denominated in currencies other than the base currency of the Fund. In addition, the base currency of the Fund is KRW but the trading currency of the Fund is in HKD. The Net Asset Value of the Fund and its performance may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.
- The borrower may fail to return the securities in a timely manner or at all. The Fund may as a result suffer from a loss or delay when recovering the securities lent out. This may restrict the Fund’s ability in meeting delivery or payment obligations from redemption requests. As part of the securities lending transactions, there is a risk of shortfall of collateral value due to inaccurate pricing of the securities lent or change of value of securities lent. This may cause significant losses to the Fund.
- The trading price of the Shares on the SEHK is driven by market factors such as the demand and supply of the Shares. Therefore, the Shares may trade at a substantial premium or discount to the Fund’s Net Asset Value.
- Payments of distributions out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction in the Net Asset Value per Share of the Fund and will reduce the capital available for future investment.
Korea Entertainment – Ready for Revival
Korea entertainment sector has experienced a strong rally this month, with four leading players -HYBE, YG, SM and JYP – posting 10%, 24%, 18% and 51% MTD growth, respectively. This is mainly driven by the industry’s resilience to potential tariff hike and improving fundamental in 2025, fuelled by top artists’ comeback, China rebound, low base and improved monetization. We also see that the industry is regaining traction, as Blackpink’s Rosé and Bruno Mars are topping the charts with their collaboration song “APT”, generating fresh buzz for Korean culture. The four leading Korean entertainment companies together accounted for 44% of the Global X K-pop and Culture ETF (3158 HK).
A “Tariff-Immune” Play
The entertainment industry, particularly through the lens of fandom (IP), holds a unique advantage for growth, especially in light of potential tariff policies from Donald Trump. If the Trump administration enacts universal tariffs, it could pose a significant challenge to the export-oriented Korean economy. However, the realm of fandom remains largely unaffected by such tariffs. Therefore, while the Korean stock market experienced volatility due to concerns over Trump’s policies this month (-2% MTD), the stock performance of the four leading entertainment companies thrived (+10%/24%/18%/51% for HYBE/YG/SM/JYP MTD).
Improving Fundament in 2025
Overall, the development status of the semiconductor industry in China still lags behind that of leading global players. One of the most significant gaps lies in semiconductor materials and equipment, where China has yet to achieve parity with the top technological leaders. Since the U.S. began imposing restrictions on access to key semiconductor technologies and components for China’s top technology companies like Huawei and SMIC in 2018, China’s semiconductor industry has made noticeable technology progress, marked by increased manufacturing capability for advanced-process-node chips, gradual migration from selling low-/mid-end products to more high-end products, such as high-performance 32-bit MCUs, and breakthroughs in previously untouched high-tech areas like self-developed CPUs.
We expect the ongoing government support and strengthening CAPEX will continuously support the growth of China semiconductor industry and the expansion of local capacities. In 2023, semiconductor CAPEX in China surged to $30 billion, nearly three times the $11 billion spent in 2019. China’s capacity expansions are expected to remain elevated in the coming years, estimated at $40-44 billion annually, driven by robust demand of domestic production lines by the local players.
We are positive on the K-pop entertainment sector in 2025 and expect accelerated growth, driven by:
1) Return of top artists BTS and Blackpink: BTS will finish their military service next June, with a new album release anticipated in 2H25 and concert tours scheduled for 2026. Meanwhile, YG has announced Blackpink’s world tour in 2025, and the members have recently released solo songs, keeping their fans engaged and excited.
Therefore, album sales and performances revenue are expected to experience substantial growth. As of 2023, BTS and Blackpink’s sales accounted for 14% of the entire domestic album market, and the anticipated attendances for their upcoming world tours is expected to surpass the combined total of concert attendees for all other artist groups under their agency. With a combined YouTube subscriber count of 170 million, the comeback of the two groups is likely to generate heightened interest not only in their own albums but also in K-pop overall. Furthermore, the competitive dynamics within their fandoms may impact senior groups, creating a domino effect that could lead to a rebound in album sales.
Moreover, their return promise more than just increased album and concert revenues; it should also boost ROI across multiple businesses. For example, fandom platforms are poised to see a surge in user traffic, while younger artists under same labels can showcase opening acts at top artists’ concerts.
2) Album sales recovery from a low base and China market rebound: The year 2024 was challenging due to a slowdown in Chinese exports and an agreement among major agencies to curb excessive competition and channel stuffing. Despite the expected incremental sales from top artists’ comeback in 2025, China’s export data finally showed a strong rebound in Jun-Sep 2024, after a long-muted period since June 2023. Additionally, the Chinese government has waived visa requirements for South Koreans, signalling positive signs for improved business conditions.
3) Improved monetization of fandom platforms: HYBE’s Weverse is launching new subscription and advertisement models in Dec 2024, while DearU, in which SM owns 31.2% stake and JYP 18.1%, joined a partnership with Tencent Music Entertainment to provide its direct messaging service within QQ Music in China. This move has also been read as a signal of relaxation of China’s informal ban on Korean content. Therefore, Weverse is likely to narrow its losses in 2025 and DearU would suggest larger value contribution to SM and JYP.
| Global X K-pop and Culture ETF (3158 HKD) |
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|---|---|
| Listing Date | 19 Mar 2024 |
| Reference Index | Solactive K-pop and Culture Index |
| Primary Exchange | Hong Kong Stock Exchange |
| Total Expense Ratio | 0.68% p.a. |
| Product Page | Link |
Source: Mirae Asset; Data as of November 2024.
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