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As if there weren’t enough geopolitical concerns in the market today, the sudden and relatively unexpected death of North Korea’s Kim Jong Il has added yet another issue to the global stage. The leader of the reclusive nation had an apparent stroke or heart attack, dying at the age of 69. He leaves behind an impoverished nation of about 23 million people in what is described by some as the most isolated country in the world. Despite the rampant poverty and the lack of basis services, however, North Korea has one of the world’s largest militaries and is one of a handful of nations that have nuclear weapons, giving the country outsized influence on the global stage.

North Korea’s Successor

Power now shifts to Jong Il’s third son, Kim Jong Un, who will now take over for the nation. Little is known about the new leader other than that he was educated in Switzerland and is believed to be in his late 20s. Even less is known about his governing style or approach to global politics causing many officials in South Korea to worry (see Go Local With Emerging Market Bond ETFs). In fact, officials in Seoul put their military forces on high alert as some are concerned that the new leader may make a rash move in order to consolidate power and demonstrate his control over North Korea. "We should increase the country's military capability in every way to reliably safeguard the Korean socialist system and the gains of revolution" the National Funeral Committee of North Korea said further adding to the tension.

Thanks to this uncertainty, South Korean stocks have been selling off across the board as some of the more risk adverse investors flee the country until more is known about how the North will proceed in the months ahead. North Korea has always been volatile and unpredictable and this sudden change only adds to the fickle nature of the country (also read India ETFs: Behind The Crash). Yet, with that being said, this could turn out to be just a short-term issue, especially if the status quo continues on the peninsula. As a result, for investors who believe that this could be a small issue going forward, this may be an attractive entry point for Korean equities. For these investors, either of the following South Korean ETFs could make for a solid investment:

iShares MSCI South Korea Index Fund (NYSEARCA:EWY)

The most popular South Korean ETF is this very liquid ETF from iShares. The fund has over $3 billion in assets and has been on the market for over a decade. In terms of sector exposure, technology takes the top spot at just over 30% while consumer discretionary (17.4%), industrials (13.7%), financials (13.6%), and materials (12.7%) all make up double digit allocations as well. For individual holdings, Samsung Electronics dominates, comprising just over 20.5% of the portfolio. EWY was down as much as 4% in the first day of trading after the news broke, pushing the fund’s loss for the year to 15.4% (read Forget FXI: Try These Three China ETFs Instead).

IQ South Korea Small Cap ETF (NASDAQ:SKOR-OLD)

For investors seeking an alternative way to play South Korean markets, this little-known fund from IndexIQ could be the way to go. The product tracks the IQ South Korea Small Cap Index which seeks to give investors exposure to publically traded small caps based and traded in Korea. Top sectors include industrials (27.5%), consumer discretionary (19.6%), and technology (14%) while top individual holdings go to Hotel Shilla, Korean Reinsurance, and Medipost. Many investors believe that small caps can offer more of a ‘pure play’ on a nation’s economy and this seems to be the case for South Korea as the fund was down close to 6.1% on the news of Kim Jong Il’s death. Nonetheless, the fund has been doing much better than its large cap counterpart so far in 2011, as the product has lost just 5.9% since the start of January (see Three Best Gold ETFs).