This Single-Country Asian ETF is Up 380%. It's Not China

China might be the premier play in Asia, but another single-country play worth considering is the Direxion Daily South Korea Bull 3X Shares (KORU).

South Korea is proving its mettle once again in an economic crisis. It’s not a new trend as the country has faced challenges in the past and bounced back.

“In 1998, Asia’s fourth-biggest economy surprised everyone by being first to recover from the region’s financial crisis,” a Forbes article noted. “In 2000 and 2008, it avoided, respectively, the worst of the dot-com and Lehman Brothers meltdowns. Ditto for the 2013 ‘temper tantrum’ in emerging markets. Now, Korea has joined China in returning to its pre-Covid growth levels.”

As for the fund itself, KORU seeks daily investment results equal to 300% of the daily performance of the MSCI Korea 25/50 Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

The index is designed to measure the performance of the large- and mid-cap segments of the South Korean equity market, covering approximately 85% of the free float-adjusted market capitalization of South Korean issuers. The fund’s performance is nothing short of extraordinary, with a gain of about 380% the last 12 months.

KORU Chart

“Teflon Korea”

Much credit goes to South Korea’s response to the pandemic. An article in Our World in Data dove deep into the country’s strategy to curb the effects of Covid-19.

“South Korea’s response to COVID-19 has been impressive,” the article said. “Building on its experience handling Middle East respiratory syndrome (MERS), South Korea was able to flatten the epidemic curve quickly without closing businesses, issuing stay-at-home orders, or implementing many of the stricter measures adopted by other high-income countries until late 2020.”

“It achieved this success by developing clear guidelines for the public, conducting comprehensive testing and contact tracing, and supporting people in quarantine to make compliance easier,” the article added.

This, in turn, is allowing the country to prosper economically.

“‘Teflon Korea’ is again proving the bears wrong by beating forecasts and growing an annualized 1.6% in the first three months of the year,” the Forbes article said. “Accelerating private consumption, increased corporate investment and rising government expenditures has Korea exiting the wreckage from 2020 faster than economies from Washington to Tokyo.”

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