A $3.3 billion ETF indexed to South Korea’s market traded lower Friday following news a rocket launched by its northern neighbor exploded over the Yellow Sea.

The iShares MSCI South Korea (NYSEArca: EWY) was down 0.6% in midday trading. Other ETFs that invest in this market include IQ South Korea Small Cap (NYSEArca: SKOR) and First Trust South Korea AlphaDEX Fund (NYSEArca: FKO). [ETF Focus: South Korea]

For the new North Korean leader, Kim Jong-un, his government’s failure to launch a satellite into orbit on Friday was a $1 billion failure, the New York Times reported Friday.

However, North Korea may follow up the setback with a more dramatic nuclear test, CBS News reported.

“This failure makes it even more likely that the North will now attempt a nuclear test in the not-too-distant future,” said Ralph Cossa, the president of Pacific Forum CSIS, in the report. “The rocket launch was supposed to demonstrate the regime’s power and technical prowess. A nuclear test may now be seen as even more necessary, not just to further perfect their weapons capability, but also to save face.”

EWY is up 13.7% year to date.

The ETF “provides broad exposure to the South Korean equity market, which has a cyclical orientation, given its heavy exposure to tech, consumer discretionary, and industrial firms, many of which are large exporters,” according to a Morningstar analyst report on the fund. “Investors looking for leveraged exposure to global growth can consider this fund.”

iShares MSCI South Korea

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