The excitement surrounding new exchange-traded fund (ETF) launches has cooled. In the first half of the year, the KOSPI index surpassed the 9,000 mark, leading to a surge in new ETF listings. However, as the stock market has recently dropped nearly 30% from its peak, the pace of new listings has significantly slowed.
As of September 9, the Korea Exchange reported a total of 1,168 domestic ETF listings, a modest increase of 2.73% (32 funds) from 1,136 on June 8. This is a stark contrast to the 5.97% (64 funds) increase seen from March to June, indicating a marked slowdown in new listings.
This trend is attributed to the sluggish stock market. With increased volatility and dwindling trading volumes, new ETFs are struggling to attract capital, leading to a stagnant market. The stagnation has also impacted the overall growth of the ETF market. The total market capitalization of ETFs, which was approximately 470.125 trillion won on June 8, has decreased to about 456.063 trillion won as of September 9, a drop of 14.621 trillion won (2.99%) over three months. During the same period, the total number of outstanding shares fell from approximately 31.127 billion to 29.396 billion, a decrease of 5.84%, confirming a trend of capital outflow from the market.
There has been a wave of delistings of unpopular and small-scale ETFs. So far this year, 22 ETFs have entered the delisting process. Notably, in the last three months alone, 13 funds, including 'PLUS Global AI Infrastructure,' 'TIME U.S. Dividend Dow Jones Active,' and 'VITA MZ Consumption Active,' have been removed. The decline in trading volumes due to the market downturn has made it increasingly difficult for 'mini ETFs' with assets under 5 billion won to cover liquidity provider fees and listing maintenance costs, prompting fund managers to undertake voluntary restructuring.
Industry insiders expect this trend of slowing listings to continue until the stock market direction becomes clearer. A representative from an asset management firm noted, "The process from ETF planning to listing review typically takes 2 to 3 months. However, with the recent increase in market volatility, fund managers are focusing on risk management rather than aggressively launching new products. A strategy centered on selecting and concentrating on high-quality representative products is likely to prevail."
* This article has been translated by AI.
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