Although the South Korea exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) has given a stellar performance lately, the recent tension between the country and the U.S. could be a factor in its recent decline.

On July 19, Taliban militants kidnapped 23 South Koreans in Afghanistan, according to Burt Herman for the Associated Press. The Taliban members demanded the release of other imprisoned Taliban militants in exchange for the hostages’ release. Although two hostages have been killed already, the U.S. continues to stand by its decision to remain impartial. In turn, South Korea sees the U.S. as the only country capable of intervening and getting Afghanistan to meet the captors’ demands. The U.S. lack of action has frustrated many South Koreans.

Perhaps as no coincidence, EWY’s performance recently started to slide. It is down 6.6% for the week. As events unfold, EWY will be worth the watch.

Ewy_etf_chart

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.