North Korea has repeatedly threatened missile strikes against the U.S. territory of Guam, but North Korean leader Kim Jong Un has recently backed off those threats, earning slight praise from President Trump in the process.
“North Korean state media reported Tuesday that Kim had reviewed a previously announced plan to fire the missiles on a trajectory over western Japan, but had decided not to go ahead with the proposal for now,” reports CNN.
U.S. officials are coordinating with their South Korean counterparts, focusing more on diplomacy and economic sanctions against North Korea, while noting that military action against the oppressive North Korean regime is not the desired course of action. Since the start of the third quarter, EWY has added $14.5 million in new assets.
“South Korean equities were hit with collateral damage from the war of words between North Korea and the US. The largest foreign-listed South Korean ETF, the iShares MSCI South Korea Capped ETF (EWY), lost half of its year-to-date performance against its globally invested peer, the Vanguard Total World Stock ETF (NYSEARCA: VT),” said Markit in a recent note. “This latest setback still puts South Korean equities way ahead of the global pack –year-to-date, EWY is a massive 9.9% ahead of VT on a total return basis.”
Related: South Korea ETF Slump May be Short
The recent dip in South Korean stocks has emboldened traders to buy that dip.
“Investors have so far viewed the situation as a buying opportunity. The 157 globally-listed ETFs with South Korean exposure have experienced over $430m of inflows so far in August. These inflows build on those experienced over the last three months, setting the asset class on track to register its largest inflow streak since the second half of 2014,” according to Markit.
EWY is down 1.7% over the past week, but the ETF is higher by 27% year-to-date. South Korea, Asia’s fourth-largest economy, is the second-largest country weight in the widely followed MSCI Emerging Markets Index behind China. South Korea is 14.5% of that index.
For more information on the South Korean markets, visit our South Korea category.