Samsung Pulls Plug on Galaxy Note 7, Sends South Korea ETF Falling

South Korea country-specific exchange traded funds plunged after electronics giant Samsung Corp. discontinued the troubled Galaxy Note 7 smartphone.

On Tuesday, the iShares MSCI South Korea Capped ETF (NYSEArca: EWY) fell 3.7% as Samsung Corporation shares declined 7.5%. Samsung is the largest component in many of the South Korea country-specific ETF, accounting for 22.0% of EWY’s underlying index.

On the other hand, the First Trust South Korea AlphaDEX Fund (NYSEArca: FKO), which takes a smart-beta indexing approach based on growth and value factors and only has a 3.1% stake in Samsung, decreased 1.8% Tuesday.

South Korean markets were dragged down by Samsung after the electronics manufacturer said it would discontinue its Galaxy Note 7 smartphone after a botched recall that continued to harm consumers and damaged the Samsung brand, the Wall Street Journal reports.

The electronics giant filed with regulators to permanently cease production and sales of the devices in response to reports that supposedly safe replacements overheated and in some cases caught fire.