Data from 2020 shows the South Korean stock market was worth more than $2tn. 

Global forecasts for Asian markets are optimistic, making it an excellent investment time. Moreover, South Korea’s economy is stable and has significant growth rates. 

Don’t know much about South Korea and its stock market? Then keep reading for a quick guide to the Korean stock market.

The South Korea Stock Market 

The Korea Stock Exchange (KRX) was a standalone stock market for much of its history.

But now, KRX is a division of the more extensive Korea Exchange. In 2005, the South Korean stock market merged with the Korea Futures Exchange and the electronic market (KOSDAQ) to form the Korea Exchange. 

The exchange is the only securities exchange operator in South Korea. Markets include:

• Bonds
• Equities
• Equity options
• Stock index futures
• Stock index options 

KOSDAQ is similar to the Nasdaq in the US. Like the S&P 500, KOSPI tracks the health of the exchange. KOSPI is the Korea Composite Stock Price Index.

As of 2021, there were almost 2,500 companies listed on the KRX. 

Investing in South Korea

The best way to invest in South Korea is through exchange-traded funds (ETFs). These will provide diversification to your portfolio via a single security.

The iShares MSCI South Korea Index Fund (EWY) is the most popular South Korean EFT. Other popular ETFs include:

• Asia Pacific Ex-Japan AlphaDEX Fund (FPA)
• First Trust South Korea AlphaDex Fund (FKO)
• FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)

Another way to invest in South Korea is through American Depository Receipts (ADRs). ADRs allow investors to buy foreign companies on the US stock exchange. But they are not as liquid as most other US stocks, so trade these with caution.

You can learn more about an excellent platform to use here to start investing.

Why Trade on the KRX?

As mentioned, South Korea’s economy attracts investors for two reasons. The first is stability. South Korea is a G20 member, a group of the world’s largest economies. It also has an annual per capita income of more than $30,000. 

The second reason is its rapid growth. Experts say the Korean economy will continue to grow at around 3%. 

Risks To Be Wary Of

Every investment comes with risk, including the KRX.

South Korea has geopolitical risk. South Korea is one of the most militarized regions of the world because of its neighbor, North Korea. 

Sudden war could completely upend the market. 

Additionally, South Korea relies heavily on exports because it has almost no natural resources. Therefore, when the global economy contracts or slows down, this can lead to problems for the market.

For example, the auto industry and consumer electronics make up a large share of exports. A contracting economy will put pressure on these industries and the whole market.

The South Korea Stock Market Explained

Despite risk, the outcomes of investments in South Korea and its stock market have good prospects. Thus, many investors are already investing. That means you can too.

If you want to learn more about investing, make sure to check out the Finance section above.