K-pop ETF creator says Korean content is at an ‘inflection point’

creators behind New Exchange Traded Funds Aiming to convert global fans of Korean content into investment opportunities, his premise is optimistic.

Since its launch on September 1, KPOP and Korea Entertainment ETF The underperformance — recently trading at $15.05 on the NYSE Arca — is down about 23% from its debut. This is in line with the more than 20% plunge in the overall Kospi index this year.

But despite the gloomy global market outlook, Jangwon Lee, CEO of CT Investments and Contents Technologies and creator of the ETF, is hopeful for South Korea’s entertainment industry.

“Content consumption, especially digital consumption, is relatively resilient to recessions and inflationary environments and over the long term,” Lee told CNBC in an interview, adding that since the fund’s inception, “all asset classes have had a tough few months. week”.

Shares of South Korean entertainment companies have been underperforming overall, with YG Entertainment down about 26% year-to-date and Hybe down more than 64% year-to-date.

“We ultimately believe that the fundamental performance of the companies in our ETF will provide further impetus to attract broader investor demand,” he said.

KPOP ETF says on it website It provides “focused on companies in the entertainment industry and interactive media and services industry that are listed on the Korea Exchange”. The fund is an index of 30 stocks, including entertainment companies that manage bands such as BTS, BlackPink and Twice – their respective agencies are HYBE, YG Entertainment and SM Entertainment.

It also includes content makers such as Dragon Studios, which produced the hit seriesforced landing on you“And platform companies like AfreecaTV, through which some people stream themselves playing video games and eating.

“We think it’s still early days because we’re witnessing an inflection point where K-pop and K-content gradually gain mainstream status globally from subcultures of the past,” he said.

Lee of CT Investments and Contents Technologies said the fund’s creative content business for global investors will thrive in the long term, with borders reopening and South Korea and Japan lifts quarantine and testing regulations for tourists.

“There is a lot of pent-up demand from existing fans, and K-pop artists have been deliberately releasing new albums in time for the reopening,” he said, adding that many artist groups have recently resumed their world tours and concerts .

Lee Ki-hoon, a financial analyst at Hana Financial Group, said the pandemic is proof that the genre has benefited from its music business being more “visual concept” oriented, as seen in its social media outreach.

“Its global fans are seeing a trickle-down effect from groups like BTS and BlackPink as they are direct beneficiaries of YouTube – it’s not bound by time or place,” Lee Ki-hoon said in an October report .”

Bulletproof TVis one of BTS’s YouTube channels with 71.5 million subscribers, while BlackPink’s channel Has 82.7 million subscribers.

Goldman forecast Income from the global music industry It will reach $131 billion by 2030 — more than double the $62 billion in 2017 — adding that streaming will propel the industry to an all-time high.

CT’s Jangwon Lee was equally optimistic, adding that he is “long-term believer” in the prospects of K-pop in the wider industry.

“Global K-pop fan engagement is significantly higher than other genre metrics, such as social media engagement and merchandise sales, including physical album sales,” Lee said.

“We believe there is a high likelihood that fans will become shareholders in companies that belong to their favorite artists,” he said.

In the near term, Hybe, the group behind BTS, could bottom out sometime around December, when the group’s plans to enlist in the South Korean military are finalized, said Lee of Hana Financial Group.

CT’s Lee said the agency’s confirmation that the band will move forward with its recruiting plan means removing some uncertainty.

“A major suspense has been cleared,” Lee said, adding that investors’ focus will now “turn to other growth prospects for its business.”