South Korea’s New Act Affects ETF

The South Korean market and the exchange traded fund (ETF) that follows it already have been doing well this year; iShares MSCI South Korea (EWY) is up 22%. The Capital Markets Integration Act, which the South Korean national assembly is scheduled to ratify next week, is anticipated to make positive, radical changes to South Korea’s finance sector, Carl Delfeld of ETF XRAY says.

The legislation is expected to create new fields in the finance industry, including banking, insurance and investment, as well as encourage creativity and consolidation, according to Anna Fifield of the Financial Times. The change also is expected to increase South Korea’s ability to compete against China. Most importantly, financial institutions will have free reign to do anything that is not explicitly banned within the new act. For example, asset managers and brokerages will be able to develop new products and provide a wider array of services.

While financials make up 19% of this ETF, information technologies make up the most of EWY at 22%. Perhaps after this act, we may see the number of financials increase.