Despite a fresh skirmish between North and South Korea, South Korea’s exchange traded funds (ETFs) have managed to stand tough in the face of turmoil.

You can’t blame investors for being a little nervous; North Korea’s move on South Korea was the biggest since 1953. In reaction, investors sold off about $60 million of South Korean shares in the three days after the attack, reports Reuters. That’s actually good news – it’s a mere drop in the bucket considering that the South Korean market is valued at $868 billion.

There are still many reasons to think of South Korea as an investment destination:

  • Solid Growth: South Korea’s GDP is expected to grow by at least 5.8% this year, and their debt is low with balance sheets looking tight. The country is enjoying a current account surplus, thanks to strong exports, particularly in the area of semiconductors and automobiles. [5 Reasons to Watch South Korea ETFs.]
  • South Korea May be Getting A Promotion: As MSCI put it, South Korea “continues to meet most developed markets criteria… notably economic development, market size and liquidity.” This year the country narrowly missed getting its upgrade from emerging market status to developed status.
  • Rising Exports: Export gains propelled South Korea’s economy to the fastest first-half expansion in a decade, fueling price pressures
  • Housing Market: Although the housing market in South Korea may be in a correction phase over the short- to medium term following a decade-long boom, Moody’s does not expect a massive increase in the number of mortgages falling into negative equity and defaulting. [South Korea ETFs Lifted by G20.]

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

  • iShares MSCI South Korea Index (NYSEArca: EWY). EWY gives you access to 102 of the largest, most actively-traded South Korean stocks. This includes major global companies such as Samsung Electronics, Hyundai Motor Co. and LG Electronics
  • IQ South Korea Small Cap ETF (NYSEArca: SKOR). SKOR tracks a basket of small-cap corporations in South Korea. It can be considered a play on the domestic economy.

South Korean small-caps only account for about a third of the whole market cap spectrum. EWY takes a sample of companies from the total South Korean market. Note that EWY heavily favors the information technology sector, whereas SKOR favors the industrials sector.

If you’ve been skittish about South Korea, recent developments haven’t appeared to hurt the markets too much. It still may be a worthy place to go, and both ETFs are above their 200-day moving average. There’s always the risk of further trouble, though, so if you own these funds, you may need to keep a close eye on them if things escalate.

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.