Long Report – Global X K-pop and Culture ETF (3158)

Investing in the K-pop equity market offers a unique opportunity to capitalize on the global cultural phenomenon of Korean Culture. The industry offers structure growth potential through continuous global expansion and potential china reopen, while its unique cultural and fandom characteristics also provides defensiveness against tariff risk under current volatile global market. Also the sector fundamental are strengthening thanks to top artists comeback. The broader K-culture wave further generates cross-sector synergies, notably benefiting Korean food and cosmetics exports, which constitute core holdings in our Global X K-pop and Culture ETF (3158). For Hong Kong investors facing limited direct access to Korean equities, this ETF delivers efficient exposure to the rising K-pop wave.

Performance Review

Global X K-pop and Culture ETF (3158) tracks the performance of the Solactive K-pop and Culture Index. The index recorded 42% YTD return as of June end, significantly outperforming Kospi’s 28% return. This is mainly because K-pop sector’s relative tariff insulation compared to major constituents of Kospi like semi and automakers that are subject to high tariff risks, alongside with growing optimism around China market reopen and improving sector fundamentals.

The popularity of “K-Pop Demon Hunters” once again reaffirms the continuing K-pop and cultural wave in the global stage. We expect this ongoing trend to continuously provide a halo effect towards Korean goods such as cosmetics and packaged food. Global X K-pop and Culture ETF (3158) provides a uniquely targeted exposure to Korean companies representing K-pop & content, food and beauty sectors.

Portfolio Analysis

Global X K-pop and Culture (3158) ETF provides a uniquely targeted exposure to Korean companies representing K-pop music, K-drama, food, internet, gaming and beauty sectors. As of June end, 75% of the product invest in K-pop and contents companies, of which c.38% coming from Korea leading 4 entertainment companies, namely SM, HYBE, YG and JYP. Besides, product also has 12% exposure to K-food and 11% to K-beauty sectors.

Korean Entertainment

Investment thesis 1: Structural Growth Opportunity from China Reopening

Starting around 2016-2017, offline K-pop concerts in mainland China have not been allowed, as well as Korean artists’ TV appearance due to THADD issue. However, starting early this year, there have been a series of positive signals on China market reopen. In Feb, Korea Economic Daily reported that China may lift its ban on K-pop culture as early as May (link). In April, all Korean boy band EPEX announced a concert in mainland China for the first time in 9 years (link) scheduled in May 2025, further boosting market expectations, although this was later cancelled (link). In May, Tencent Music (TME) acquired c.10% stake in SM Entertainment (link), becoming the second largest shareholder. The news was followed by SM and TME establishing a partnership through an MOU (link). Therefore, we see strengthened relationship between major K-pop companies and leading Chinese streaming platforms, which was read as advance deployment before China reopen.

 

The victory of Jae-Myung Lee in the presidential election has fuelled market optimisn for Korea-China relations to further improve. We also expect stronger support for K-culture, driven by Lee’s pledge to expand concert venues to boost K-pop concerts and attract more foreign visitors. This enhanced live event ecosystem is set to positively transform the K-pop industry, diversifying revenue streams beyond album sales into concerts and immersive fan experiences.

Investment thesis 2: Defensiveness from Tariff “Immune” Characteristics

Amid recent tariff turmoil, K-pop industry demonstrated inherent resilience and relatively insulated from direct tariff risks. Unlike tangible goods exporters, entertainment core revenue largely derived from live events, digital streaming and merchandise, while they are inherently immune to trade tariffs. K-pop industry leverages its unique cultural appeal and fandom characteristic, enabling companies to have strong bargaining power and cost pass-through to customers.

Investment thesis 3: Rosy Outlook with Fundamental Improvement

We expect Kpop industry to see fundamental improvement thanks to the return of top artists. BTS finished their military service this June, with a new album release anticipated in 2H25 and concert tours scheduled for 2026. Blackpink kicked off their world tour “Deadline” this July. Therefore, performances revenue as well as album sales 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 179 million (as of July 2025), 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.

Why Top 4 K-pop Entertainment Companies?

3158 has strong presence to top 4 K-pop entertainment companies, total representing c.40% of our holdings. We believe investing in 4 K-pop leaders – HYBE, SM, JYP and YG – can best capitalize K-pop boom, while offering relatively lower risk due to proven scalability and their repeated hit production.

Unlike Western music labels that primarily aggregate and promote artist-led content, top K-pop entertainment companies employ a fundamentally different, vertically integrated system that dominated by the company itself.  The model encompasses the entire artist lifecycle, from scouting and training young talents to producing music, marketing, and etc. Refined over more than 20 years, this approach leverages the companies’ accumulated industry resources, expertise, and infrastructure across all facets of creation and promotion. Consequently, it generates strong fandom ecosystems and consistently produces high-quality artists, significantly lowering the inherent hit-or-miss risks associated with launching new acts. For example, we see the “Big-4” K-pop entertainment companies attract substantially more attention from global audience with much more followers not only for their corporate channels but also for their new artists channels. This repeated success model creates a self-reinforcing cycle; therefore, these leading companies enjoy greater launch visibility and built-in audiences for their new groups, establishing a formidable entry barrier for competitors.

Cross Sector Synergies – Korean Consumer Goods Riding on the K-pop Wave

K-beauty: Global K-beauty Boom to Continue

The product position in K-beauty sector include cosmetics brands companies like Amorepacific (090430 KS), the parent company of renowned brands such as Sulwhasoo, Hera and Laneige, and LG H&H (051900 KS), parent company of Whoo and O Hui, and also major ODM companies like Cosmax (192820 KS) and Kolmar (161890 KS).

Fueled by the ongoing global K-Beauty boom, Korean cosmetic exports have demonstrated remarkable growth since early 2023. We believe this growth phase remains in its early stage and is poised to continue robustly for the upcoming years based on strong leading indicators.

The export strength remains evident in 2Q25, with total Korea cosmetics exports growing 15.4% YoY to reach US$2.4bn, and exports to non-China market surging 24.5% YoY to US$1.99bn. By region, Europe and New market are emerging as new key growth drivers with exports to Europe/new markets soaring 70%/32% YoY in 2Q25. We believe this growth could be sustained or even further accelerated considering current low penetration with many brand companies are planning to enter these markets and platform companies are developing sales/channel coverage. Although previously there’s some market concern over tariffs, exports to US also rose 15% YoY in 2Q25.

We also observed compelling evidence supporting the continued strength of the K-beauty boom. Consumer interest remains demonstrably high: Google Trend Index for K-beauty keywords is consistently reaching new peaks, and this momentum is reinforced by the rapidly increasing volume of TikTok hashtags related to Korean beauty, both of which renew historical highs almost monthly. The number of Korean products within the top 50 best-selling cosmetics across Amazon’s sub-categories continues to grow consistently, defying seasonal fluctuations.

Within the K-beauty sector, indie brands are emerging as increasingly vital players. Major Korean ODM (Original Design Manufacturer) companies stand to be key beneficiaries of this trend, as most unlisted and SME cosmetic brand operators rely almost entirely on ODMs for product research, development, and production. Robust order flows for leading Korean ODMs now originate not only from domestic brands but also from international players seeking their expertise. Given that the global cosmetics industry’s reliance on ODMs remains in its nascent phase, we anticipate structural growth in ODM demand will persist over years.

K-food: Spice it Up

Riding on global popularity of ‘K-culture’ and rising awareness of Korean cuisine, Korea’s food exporters are experiencing significant growth opportunities. As the fastest-growing food export, Korean ramen sales grew by 30% CAGR over 2022-24, while overseas sales exceeded domestic sales for the first time last year. This is also benefiting from evolving consumer behaviours, specifically downtrading amid high inflation, post-pandemic increasing home-cooking demand and higher accessibility via viral online platforms. Korean ramen has also been gaining shares from its global peers. We believe that the K-ramen phenomenon has become a enduring and influential trend in the global culinary scene.

Prior to 2024, key markets for K-noodles were concentrated in China, the US, and some Asian countries; however, the footprint has now broadened significantly to Europe, the Middle East, and other regions. Driven by this geographical diversification, we believe K-food exports possess substantial room for sustained growth.

 

Samyang and Nongshim have a more export-driven business structure, with 79% and 45% export sales contribution to total sales comparing to the peer average of 31%. Both companies are intensifying their focus on overseas business with significant investments in capacity and distribution, positioning them to further capitalize on the Korean Ramen wave. Samyang plans a 36% capacity increase in 3Q25 and aims to open its first overseas factory in China in early 2027, which will add another 31% of total capacity. Nongshim’s factory, which is expected to be launched in 2Q26 in Busan will boost its export capacity by 78%. We believe the capacity expansion will support K-noodles’ continued penetration for coming years.

 

Major holdings:

1. HYBE (352820 KS)

HYBE, formerly known as Big Hit Entertainment, is a leading Korean entertainment company. The company is best known for introducing BTS, the renowned K-pop male band with numerous #1 records. The company also operates a K-pop fan community platform called Weverse, a one-stop service allowing fans to follow their favourite artists, share feeds with other like-minded fans, consume exclusive original content and merchandise related to their artists all in one place. Artist diversification is well on track and the single IP overreliance risk now relieved with emerging groups like SEVENTEEN and illit.

2. JYP Entertainment (035900 KS)

JYP is a leading K-pop agency that cultivated Twice and Stray Kids. Both groups, which are in their tenth and seventh years since their respective launches, are consistently breaking their career-high initial album sales volume, backed by the resumption of in-person concerts. Enhanced lifecycle of core artists allows JYP’s earnings to be more resilient, while providing a buffer for the company to train new groups. Strong earnings growth from 2Q25 has high visibility driven by Stray Kids’ tour – 23 shows with a total audience of c1.2m based on the maximum capacity of each venue during the quarter. Additionally, TWICE launched its new world tour this July, further supporting full-year earnings improvement.

3. SM Entertainment (041510 KS)

SM Entertainment is recognized as a pioneer in the K-pop industry, pioneering an integrated training and production system. The company involved in talent management, music production, event and concert management, and music publishing. Its successful long track record include the first K-pop boy band HOT debut in 1996, followed by a girl group SES in 1997 and another boy band Shinhwa in 1998. In the 2000s and 2010s, SM played a leading role in the Korean Wave (Hallyu), nurturing globally successful groups like TVXQ, Girls’ Generation, Super Junior, and EXO.

Key young performers now include Aespa, NCT and RIIZE. We expect a recovery starting from 2Q25, supported by upcoming releases from key artists such as Aespa, NCT WISH, and RIIZE. Album sales in April (1.6m+) from the return of NCT WISH and NCT’s Mark has surpassed the total sales in 1Q25 (971k), while the momentum is expected to sustain from upcoming releases by Aespa and RIIZE in May and June.

4. YG Entertainment (122870 KS)

YG Entertainment is a South Korean multinational entertainment agency which operates as a record label, talent agency, music production company, event management and concert production company, and music publishing house. YG’s girl band Blackpink debuted in 2016 and became the first female K-pop group to have four number-one singles on Billboard’s World Digital Song Sales chart. BabyMonster, a newly released girl band by YG, debuted on November 27, 2023. Amid growing expectations for BabyMonster (in addition to Treasure), YG’s artist/IP diversification efforts should bear fruit in 2025.

5. Samyang Foods (003230 KS)

Samyang Foods is a rising Korean ramen manufacturer and has been successful with their global expansion thanks to its popular ‘Spicy Buldak noodle’ series. The company experienced remarkable market cap growth in 2024, surging 254% YoY thanks to rapidly increasing overseas exports. Exports account for 78% of Samyang’s revenue, supporting its robust profit margins. As of 2024, the company’s operating margin reached 20%, significantly surpassing the global average of 11.1% among its peers.

6. Cosmax (192820 KS) & Kolmar (161890 KS)

Cosmax and Kolmar are the world’s top two cosmetic original development manufacturing (ODM) players. Cosmax is particularly strong in color cosmetics, while Kolmar specializes in skincare products. Together, they hold over 50% of the Korean cosmetics ODM market, with other competitors accounting for less than 10% each, indicating limited competition domestically. Both companies are expanding into the Chinese and North American markets, where they face local players. However, these local competitors are less than one-fifth the size of Kolmar and Cosmax and offer only limited services.

7. CJ Corp (001040 KS)

CJ Corp is a South Korean conglomerate with diversified operations through its subsidiaries spanning Food and Food services, Retail and Logistics, Entertainment and Media, Infrastructure, and Life Science.

CJ Corp, holding a 51.15% stake, is a major shareholder of CJ Olive Young, South Korea’s top-tier health and beauty retailer, whose path to becoming a global K-beauty hub commenced in 2016 when it first exceeded 1 trillion won in annual sales; propelled by the worldwide K-beauty trend, the company achieved significant revenue growth in 2024, reporting a 24% YoY increase to 4.8 trillion won, and its Global Mall platform further demonstrated strong expansion with a 70% sales surge in the first half of 2025, largely fueled by robust demand from the United States.

 

	Global X K-pop and Culture ETF (3158)
Listing Date	19 Mar 2024
Reference Index	Solactive K-pop and Culture Index
Primary Exchange	Hong Kong Stock Exchange
Ongoing Charges Over A Year	0.68%
Product Page	Link

Source: Mirae Asset; Data as of July 2025.  The Fund adopts a single management fee structure, whereby a single flat fee will be paid out of the assets of the Fund to cover all of the costs, fees and expenses of the Fund. As the Fund is newly set up, this figure is an estimate only and represents the sum of the estimated ongoing charges over a 12-month period, expressed as a percentage of the estimated average Net Asset Value of the Listed Class of Shares over the same period. It may be different upon actual operation of the Fund and may vary from year to year. As the Fund adopts a single management fee structure, the estimated ongoing charges of the Fund will be equal to the amount of the single management fee, which is capped at 0.68% of the average Net Asset Value of the Listed Class of Shares of the Fund. Any ongoing expenses exceeding 0.68% of the average Net Asset Value of the Listed Class of Shares of the Fund will be borne by the Manager and will not be charged to the Fund. Please refer to Product Key Facts below and the Prospectus for details.