Gambling ETF


More ETFs for Koreans’ love of gambling

There is a notion in Korea that Korean people are uniquely susceptible to the siren song of gambling. According to the Korea Centre on Gambling Problems, a government body put together in 2012, gambling addiction is two-to-three times worse in Korea than in other big economies. Thus gambling remains illegal in most of Korea.

Fortunately however for Koreans with a gambling itch, ETFs are here to save the day.

The National Agricultural Cooperative Federation, the Korean farmers union, is listing three new ETFs that tap into Korean retail investors hot passion casino-like ETFs.

  • NH-Amundi HANARO KOSDAQ150 Futures Leverage ETF (306530)
  • NH-Amundi HANARO 200 Futures Inverse ETF (306520)
  • NH-Amundi HANARO Short-term MSB ETF (306540)

The first of these products is the most straightforward and will provide 2x leveraged exposure to Kosdaq 150 futures. The second of these will track the inverse of an index of Kospi 200 futures. The third of these ETFs will track an index of short term monetary stability bonds. Monetary stability bonds in Korea are issued by the Bank of Korea to help support its monetary policy. MSBs tend to have maturities ranging from 14 days to 2 years.

Analysis – Koreans gambling habit drives its L&I ETF market

Korea’s ETF market is one of the largest in the world, thanks to huge interest from Korean retail investors. Yet Korean retail investors don’t want plain vanilla ETFs, in the way that AngloSaxon retail investors do. Instead, they want derivatives-backed products and products that might help them get rich quick. (Bitcoin was hugely popular in Korea for the same reason).

Leveraged and inverse are a particular favourite and make up over 90% of daily ETF trading in Seoul. While this may sound like an immature way to invest, the lure of L&I ETFs is lifted by thepessimism with which many young Koreans regard their country’s future economic prospects.