ETF Trends
ETF Trends

After the devastation brought on by the financial crisis, the South Korean economy, along with its related exchange traded fund (ETF), has been strengthening on fiscal stimulus and the government’s expansionary policies.

The South Korean economy was able to climb out of its recession, expanding for three consecutive quarters, reports Kim Yoon-mi for The Korea Herald. Other reasons to like what South Korea is doing right now include:

  • The Ministry of Strategy and Finance revised up its growth forecast for the year to 0.25% and increased next year’s growth outlook to 5%. (Ways to get in on South Korea’s expansion).
  • Since April, the South Korean won has been steadily appreciating, gaining strength on the rising current account surpluses and the increase in overseas investors.
  • The nation’s external debts and short-term overseas borrowings have both decreased from an year earlier.
  • The surge in foreign investors has brought a swift recovery to the local stock market, with overseas investors net-buying $24 billion worth of stocks in the first 11 months of 2009 after suffering from a net-sale of $30 billion worth of stocks in 2008, according to financial industry data.
  • Exports, the main area of output growth, are on the mend and the export industry is performing better because of “an increase in ship exports, China’s strong growth and the depreciation of the local currency,” says the Finance Ministry.
  • Unemployment is slowing. The rate rose by 146,000 in the first quarter year-over-year, 134,000 in the second quarter and 1,000 in the third quarter.
  • Consumer inflation dropped down to 2.4% in November, compared to 4.5% in November of 2008.

However, the country’s current account structure is vulnerable to changes in commodity prices since raw materials makes up around 60% of total imports. Experts believe Korea should improve technological competitiveness to reduce energy dependence on imports.

For more information on South Korea, visit our South Korea category.

  • iShares MSCI South Korea (NYSEArca: EWY): up 71.4% year-to-date

Max Chen contributed to this article.

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.