South Korea Is The World’s Fastest-Growing Metaverse ETF Market – Immerse Yourself Now

South Korea Is The World’s Fastest-Growing Metaverse ETF Market – Immerse Yourself Now

2nd December 2021 | 5 min read

While Facebook was busy uprooting social media users with its Meta rebranding, South Korea’s foray into the metaverse was already in full effect. Unbeknownst to many, South Korea has inconspicuously become the go-to for everything metaverse related in Asia. 

From Kpop powerhouses YG Entertainment to social media giants Kaver, Korea’s biggest industries are taking a collective step into the metaverse and are offering to take investors with them. With a basket of ETFs engineered to ride the metaverse wave, South Korea now has the world’s leading market in the revolutionary space.

ETF Extreme

Korea’s metaverse ETF market reached USD 100 million in just under two weeks after launching in mid-October, according to Bloomberg Intelligence analyst Rebecca Sin. These four ETFs and their one-month performances are as follows: 

  • KB Asset Management’s KBSTAR iSelect Metaverse (+19.35%)
  • NH Amundi Asset Management’s Hanaro Fn K-Metaverse MZ (+25.71%)
  • Mirae Asset Global Investment’s Tiger Fn Metaverse (+47.57%)
  • Samsung Asset Management’s KODEX K-Metaverse Active (+49.46%)

Collectively, Korean metaverse ETFs have combined inflows of USD 300 million this year, with analysts expecting funds to surpass USD 600 million by year end. Some 90% of these flows are attributed to retail investors.

By unpacking these ETFs, we’re able to uncover which Korean companies are behind the meta drive. Samsung’s Metaverse ETF consists of Hybe, Naver, Krafton, Peal Abyss and JContentree. Mirae Asset holds Naver, LG Innotek, Hybe, JYP Entertainment and YG Entertainment.

Kpop lovers will recognise names such as Hybe and YG Entertainment for representing the likes of K-groups BTS and Blackpink. Gamers will also be familiar with Krafton for developing one of the world’s biggest multiplayer shooters, PlayerUnknown’s Battlegrounds (PUBG)

“The metaverse theme was clearly visible for the Korean video game publishers this recent earnings season”, wrote Morgan Stanley analyst Seyon Park in a note.

The companies listed in the Korean metaverse ETFs are not particularly unique in terms of their core functions; music, gaming and social media are industries that exist globally. However, Korea is at the forefront of pushing these industries through the metaverse prism.

ETF, NFT, BTS

Capitalising on BTS’s estimated USD 100 million net worth with merchandise has been a card frequently played by Hybe but unofficial products have flooded the market. To preserve official merchandising, Hybe is planning an NFT empire. Partnering with Dunamu – operator of South Korea’s largest crypto exchange Upbit – to create the NFT trading platform, Hybe will sell digital photo cards of its artists including BTS. 

Each digital card will have a unique identifier, adding to the scarcity factor prominent in the NFT virtual world.

“As we prepare to enter the NFT business in a sustainable manner, we will directly participate in the operation and implement fan-oriented policies”, Hybe said of its new project.

Image credit: I DARE U JK on Wikimedia

Hybe will debut its platform in the United States, starting with its own IP, but hopes to expand to acts not managed by the company. The Korean corporation also manages Justin Bieber, Ariana Grande and J. Balvin through its U.S. branch.

Although not launching until the first half of next year, Hybe’s announcement of the NFT platform triggered a 10% spike in its stock price in November. 

Another leading stock in the metaverse is GIANTSTEP Inc, which only debuted on Kosdaq in March 2021. As well as working with NAver to produce extended reality concerts, the company focuses on VR tech. One of the GIANTSTEP’s biggest projects is creating virtual avatars for SM Entertainment Co.’s kpop group aespa.

Crafty Krafton

Krafton’s PUBG is one of the most popular games currently, with its highest number of concurrent players on Steam recorded in January 2018 at 3.24 million. Furthermore, following the release of Battlegrounds Mobile in India this year, PUBG Mobile has become the most downloaded game worldwide.

If this wasn’t enough, Krafton is working on a PUBG Metaverse. In a video announcing the project, Krafton CEO Chang-Han Kim highlighted how regular updates on PUBG Mobile increased users’ engagement and how the PUBG Metaverse will facilitate this.

Its upcoming title New State will further focus on its world-building, keeping akin to metaverse and gaming dynamics.

Aside from PUBG, Krafton also recently announced a fantasy series after licensing Korean novel The Bird That Drinks Tears by Lee Yeong-do. Dubbed “Project Windless”, Krafton’s new venture is a multimedia franchise that extends to games and beyond.

Naver’s In Fashion

Naver, known for its search engine in Korea, has developed a fashion metaverse ecosystem called Zepeto. The project has secured a USD 150 million investment from SoftBank in a Series B funding round, putting the metaverse platform’s valuation at USD 1 billion. Hybe and a group of South Korean investors have also contributed a further USD 41 million.

On Zepeto, users create their own digital avatars with which they can interact with the platform’s virtual space. It currently has over 2 million active daily users and is most popular with females aged between 13 and 24.

A 28-year-old creator based in Seoul who goes by the name ZDE earns UDS 8,500 per month selling digital clothes on Zepeto. In one and a half years, ZDE has sold over 1.4 million virtual items.

Image credit: Zepeto

Zepeto’s fashion focused theme has caught the attention of international brands such as Gucci, Dior and Ralph Lauren.

“We’re probably the world’s largest virtual fashion marketplace”, Rudy Lee, Naver Z Corp’s chief strategy officer, said.

Zepeto’s metaverse platform also offers its users the opportunity to meet people around the world and (digitally) wear unique clothing. “I can never wear the things Blackpink wears in real life. But my Zepeto avatar—she can. The dress-up part, I really love that”, said 28-year-old user Monica Louise.

Investing In The Future

Just as this article has only scraped the surface of South Korea’s foray into the metaverse, there’s still plenty more work needed for the technology to fully materialise. Re-shaping internet users’ minds to adopt the metaverse and all its intricate mechanisms could be a dealbreaker. 

People need to buy into the virtual metaverse to fully embrace it, and this could prove challenging at a time when society is desperate to break free of the stay-at-home chains enforced by the pandemic. Venturing outside freely is currently a higher priority than venturing digitally. 

That said, the younger generation seems to be adopting metaverse principles more keenly. With the likes of Minecraft and Roblox, the meta framework has already been set. It’s this generation that will pedal the metaverse into the forefront of technology.

Taiwan-based analyst at International Data Corp believes that the metaverse won’t “take shape until 2025 at the earliest”. With 2022 just around the corner, three years is a relatively short period of time in the tech world. 

These Korean metaverse ETFs just want to put you first in their digital universe before it lights up like dynamite.

To read more about how the metaverse blurs the lines between reality and fiction, click here.

Written by Cohan Chew

Having co-founded Europe’s biggest East Asian culture website (WeAreResonate.com), Cohan has since ventured into East/West equities. His writing background includes Seeking Alpha, The Motley Fool, Capital A, Time Out Singapore, The Huffington Post, Gigwise and Redstar Qingdao.

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