Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

There were four new<a href="http://www.koreaherald.com/view.php?ud=20211013001007" target="_blank" rel="noopener"> metaverse related ETFs</a> were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs.

There were four new metaverse related ETFs were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. 

Listing of 4 New Metaverse Related ETFs in Korea

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In this insight, we provide 8 examples of how metaverse is revolutionizing numerous businesses in Korea. We also provide a list of Korean companies that are actively trying to expand their metaverse businesses. Because metaverse is in the initial stages of growth for many of these businesses, their contributions to their companies' sales and profits may not be meaningful right now. However, they are experiencing a significant popularity. Metaverse is certainly one of the key industry trends that is likely to have a multi-years impact on the companies mentioned in this insight.
The term "metaverse" was first coined by the writer Neal Stephenson in his 1992 science fiction novel <a href="https://digiday.com/marketing/wtf-is-the-metaverse/" target="_blank" rel="noopener">Snow Crash </a>where metaverse refers to a popular virtual world where the main characters are equipped with augmented technologies. 
Metaverse refers to a computerized domain where the users can share their virtual encounters. Still in the beginning phases of advancement, metaverse has become more important in key industries industries including technology, media, and telecom. In addition, metaverse is also impacting other major industries such as retail, gaming, and fashion. 
Metaverse will empower its users to be more engaged in online shopping, web-based media, entertainment, and share virtual encounters. Metaverse is often considered as a "coming together" of numerous technologies including augmented reality (AR), virtual reality (VR), 5G, smartphones, and distributed computing. Up until recently, the gaming industry has been driving the demand for metaverse. However, greater improvements in technologies have allowed metaverse to flourish in other industries as well. 
South Korea is one of the key countries driving the metaverse industry globally. This is one of the leaders in this area and there will be numerous, interesting opportunities involving metaverse in Korea. 
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In this insight, we provide 8 examples of how metaverse is revolutionizing numerous businesses in Korea. We also provide a list of Korean companies that are actively trying to expand their metaverse businesses. Because metaverse is in the initial stages of growth for many of these businesses, their contributions to their companies' sales and profits may not be meaningful right now. However, they are experiencing a significant popularity. Metaverse is certainly one of the key industry trends that is likely to have a multi-years impact on the companies mentioned in this insight.
The term "metaverse" was first coined by the writer Neal Stephenson in his 1992 science fiction novel Snow Crash where metaverse refers to a popular virtual world where the main characters are equipped with augmented technologies. 
Metaverse refers to a computerized domain where the users can share their virtual encounters. Still in the beginning phases of advancement, metaverse has become more important in key industries industries including technology, media, and telecom. In addition, metaverse is also impacting other major industries such as retail, gaming, and fashion. 
Metaverse will empower its users to be more engaged in online shopping, web-based media, entertainment, and share virtual encounters. Metaverse is often considered as a "coming together" of numerous technologies including augmented reality (AR), virtual reality (VR), 5G, smartphones, and distributed computing. Up until recently, the gaming industry has been driving the demand for metaverse. However, greater improvements in technologies have allowed metaverse to flourish in other industries as well. 
South Korea is one of the key countries driving the metaverse industry globally. This is one of the leaders in this area and there will be numerous, interesting opportunities involving metaverse in Korea. 


How Is Metaverse Revolutionizing Businesses in Korea? Virtual Humans Rozy & Lucy Are Just a Start

Cross Asset Strategy

<blockquote><a href="https://twitter.com/TimSweeneyEpic/status/1432647669864878083?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1432647669864878083%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.pcgamer.com%2Fsouth-korea-passes-law-with-major-implications-for-apple-vs-epic%2F" target="_blank" rel="noopener">Korea</a> is first in open platforms! Korea has rejected digital commerce monopolies and recognized open platforms as a right. This marks a major milestone in the 45-year history of personal computing. It began in Cupertino, but the forefront today is in Seoul. (Tim Sweeney - Founder of Epic Games)</blockquote>In a landmark case (an amendment of the Telecommunications Business Act), the <a href="https://www.wsj.com/articles/google-apple-hit-in-south-korea-by-worlds-first-law-ending-their-dominance-over-app-store-payments-11630403335" target="_blank" rel="noopener">Korean government</a> announced on 31 August that Google and Apple will need to open their app stores to alternative payment systems in South Korea. This change in regulation is likely to negatively impact Google and Apple's lucrative commissions on digital sales.A new bill was passed by the Korean National Assembly on 31 August which will significantly reduce Google and Apple's dominance of digital sales on their app platforms. The final step is for President Moon to sign this bill but it is almost a near certainty that he will sign this bill. The following are the major companies/sectors that could benefit from the change in law:<ul>
<li><a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a></li>
<li><a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a></li>
<li>Korean Telcos</li>
<li>Korean Game Companies</li>
<li>Korean Entertainment/Music/Movies/Drama Companies </li>
</ul>

Korea is first in open platforms! Korea has rejected digital commerce monopolies and recognized open platforms as a right. This marks a major milestone in the 45-year history of personal computing. It began in Cupertino, but the forefront today is in Seoul. (Tim Sweeney - Founder of Epic Games)In a landmark case (an amendment of the Telecommunications Business Act), the Korean government announced on 31 August that Google and Apple will need to open their app stores to alternative payment systems in South Korea. This change in regulation is likely to negatively impact Google and Apple's lucrative commissions on digital sales.A new bill was passed by the Korean National Assembly on 31 August which will significantly reduce Google and Apple's dominance of digital sales on their app platforms. The final step is for President Moon to sign this bill but it is almost a near certainty that he will sign this bill. The following are the major companies/sectors that could benefit from the change in law:
Naver Corp (035420 KS)
Kakao Corp (035720 KS)
Korean Telcos
Korean Game Companies
Korean Entertainment/Music/Movies/Drama Companies 


Korean Government Forces Google & Apple To Open Their App Stores to Alternative Payments

In this insight, we have identified 39 companies in Korea that are most affected by the end of the ban on Korean culture-related products and services (한한령) which the Chinese government has put in place since 2017. We then divided these 39 companies into nine different sectors. The end of this ban was first announced on the morning of June 30th and many of these stocks rallied on June 30th but gave up a lot of the gains on July 1st. Overall, in the past two days, these 39 stocks are up on average 3.2%, outperforming KOSPI which is up only 0.6%. <div class="content-highlight">
<h2>Korean Media/Entertainment vs. Cosmetics? </h2>
A key question for the investors is "Should I add more Korean media/entertainment stocks or cosmetics stocks, in the midst of the end of the ban on Korean culture products by China?" In our view, over the next 6 to 12 months, the Korean media/entertainment companies listed below are likely to have greater positive benefits from the end of the ban versus the cosmetics companies.
Youtube must probably love K-pop since this is one of the most widely watched videos globally. YG Entertainment's Blackpink group released its new music vidoe (How You Like That), which broke all kinds of records for breaking the 100 million views on Youtube in the shortest period of time. 
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In this insight, we have identified 39 companies in Korea that are most affected by the end of the ban on Korean culture-related products and services (한한령) which the Chinese government has put in place since 2017. We then divided these 39 companies into nine different sectors. The end of this ban was first announced on the morning of June 30th and many of these stocks rallied on June 30th but gave up a lot of the gains on July 1st. Overall, in the past two days, these 39 stocks are up on average 3.2%, outperforming KOSPI which is up only 0.6%. 
Korean Media/Entertainment vs. Cosmetics? 
A key question for the investors is "Should I add more Korean media/entertainment stocks or cosmetics stocks, in the midst of the end of the ban on Korean culture products by China?" In our view, over the next 6 to 12 months, the Korean media/entertainment companies listed below are likely to have greater positive benefits from the end of the ban versus the cosmetics companies.
Youtube must probably love K-pop since this is one of the most widely watched videos globally. YG Entertainment's Blackpink group released its new music vidoe (How You Like That), which broke all kinds of records for breaking the 100 million views on Youtube in the shortest period of time. 


A Comprehensive List of Firms Benefiting from the End of the Ban of Korean Culture Products by China

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>DearU is one of the new inclusions for the Korea Value Up-Index in June. Overall, I think DearU's shares are oversold. </li>
<li>DearU's shares are trading at P/E of 13.6x and P/B of 2.3x (2026 consensus earnings estimates). It had average P/E of 38.6x and P/B of 4.6x from 2022 to 2025. </li>
<li>The company's operating profit jumped by 77% YoY to reach 9.7 billion won in 1Q 2026. Consensus estimates operating margin of 44% in 2026.</li>
</ul>


DearU is one of the new inclusions for the Korea Value Up-Index in June. Overall, I think DearU's shares are oversold. 
DearU's shares are trading at P/E of 13.6x and P/B of 2.3x (2026 consensus earnings estimates). It had average P/E of 38.6x and P/B of 4.6x from 2022 to 2025. 
The company's operating profit jumped by 77% YoY to reach 9.7 billion won in 1Q 2026. Consensus estimates operating margin of 44% in 2026.


South Korea

S.M.Entertainment Co. plans, produces, promotes, and markets Korean rock and roll music in several formats, such as compact discs (CD), concert tours, television productions, and music videos.  The Company also operates artist management business as well as licensing and copyright business from the company's music records.

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S.M.Entertainment Co (041510 KS)

How Is Metaverse Revolutionizing Businesses in Korea? Virtual Humans Rozy & Lucy Are Just a Start

In this insight, we provide 8 examples of how metaverse is revolutionizing businesses in Korea. We also provide a list of Korean companies that are...

Douglas Kim

Korean Government Forces Google & Apple To Open Their App Stores to Alternative Payments

In a landmark case, the Korean government announced on 31 August that Google and Apple will need to open their app stores to alternative payment...

Douglas Kim

A Comprehensive List of Firms Benefiting from the End of the Ban of Korean Culture Products by China

In this insight, we have identified 39 companies in Korea that are most affected by the end of the ban on Korean culture-related products and...

Douglas Kim

Korea Small Cap Gem #64: DearU

DearU is one of the new inclusions for the Korea Value Up-Index in June. Overall, I think DearU's shares are oversold. DearU is a leading fandom...

Douglas Kim

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