According to analysis from Mirae Asset Global Investments and Global X ETFs (Hong Kong) research analyst Liu Zijun, Korean culture as a global phenomenon is demonstrating structural growth potential through continuous global expansion and the potential trend of China possibly lifting its "Korean ban." Against the backdrop of intensifying global market volatility, the unique resilience and commercialization potential of Korean Wave culture makes it a noteworthy investment direction.
On March 19 last year, the Global X Korean Music and Culture ETF (03158) officially listed on the Hong Kong Stock Exchange. This ETF provides investors with an efficient pathway to participate in the rise of the Korean Wave, covering multiple high-growth sectors including entertainment, beauty, and food. Particularly given the certain barriers Hong Kong investors face in directly investing in Korean stocks, this ETF has become an ideal tool for positioning in the Korean Wave industry.
The Global X Korean Music and Culture ETF tracks the Solactive Korean Pop Music and Culture Index. As of the end of June, its year-to-date return reached 42%, significantly outperforming the Korea Composite Stock Price Index (KOSPI)'s 28%, primarily benefiting from the tariff isolation characteristics of the Korean Wave industry and optimistic expectations for China's market reopening.
Specifically, one of the core attractions of the Korean Wave entertainment industry lies in its potential to benefit from structural growth opportunities should China lift its "Korean ban." Since the beginning of this year, a series of positive signals have emerged regarding China's market lifting of the "Korean ban." For example, in February, Korean media reported that China might lift its ban on Korean Wave culture as early as May. In May, Tencent Music (01698) acquired approximately 10% of SM Entertainment's shares, becoming its second-largest shareholder. Subsequently, SM and Tencent Music established a cooperative relationship through a memorandum of understanding.
Additionally, following Lee Jae-myung's presidential election victory, market expectations for improved Korea-China relations have warmed, while his promise to expand concert venues to promote Korean Wave culture development is expected to further expand the industry's revenue sources from album sales to concerts and immersive fan experiences.
In the current global trade environment, the Korean Wave entertainment industry demonstrates unique defensive characteristics. Unlike industries such as semiconductors and automobiles that are easily affected by tariffs, the core revenue of the Korean Wave industry comes from live events, digital streaming, and merchandise, areas that are essentially unaffected by trade tariff impacts. Furthermore, the strong fan base of Korean Wave culture grants companies strong pricing power, enabling them to pass costs on to consumers.
Improvements in industry fundamentals also provide an optimistic outlook for investing in the Korean Wave entertainment industry. The return of top artists such as BTS and BLACKPINK is expected to significantly boost market performance. BTS plans to release a new album in the second half of 2025 and launch a tour in 2026, while BLACKPINK's world tour "Deadline" kicked off in July this year. The return of these two groups will not only drive their own commercial performance but may also boost the entire Korean Wave market's popularity through fan competition effects, while driving exposure for other artists under their management companies, further enhancing overall commercial value.
The Global X Korean Wave and Culture ETF holds approximately 40% positions in the four major Korean Wave entertainment companies—HYBE, SM, JYP, and YG. Global X believes that investing in these four leading Korean Wave enterprises best captures the Korean Wave trend while presenting relatively lower risk due to their proven scalability and ability to continuously produce hit content.
The global Korean Wave cultural trend is not limited to the entertainment industry but has also driven growth in Korea's beauty and food industries. Korean cosmetics exports have grown significantly since 2023, with a 15.4% year-on-year increase in Q2 2025, with particularly strong growth in Europe and emerging markets at 70% and 32% respectively. Consumer interest in "Korean beauty" continues to surge, with related keyword searches and social media popularity reaching new highs. Considering the currently low penetration rates in these markets and numerous brand companies planning to enter these markets, while platform companies are expanding sales/channel coverage, Global X believes this growth momentum is expected to continue or even accelerate further.
In the food sector, Korean ramen has become one of the fastest-growing export categories, with a compound annual growth rate of 30% from 2022-2024, with overseas sales already exceeding the domestic market. Companies like Samyang and Nongshim are increasing overseas capacity investments to capture this growth opportunity. Samyang plans to increase capacity by 36% in Q3 2025 and plans to open its first overseas factory in China in early 2027, further boosting total capacity by 31%. Nongshim's Busan factory is expected to begin production in Q2 2026, increasing its export capacity by 78%. These initiatives will support the continued penetration of Korean food products in global markets.
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