Mirae Asset Launches Japan ETF Investing Half Its Assets in Samsung Electronics, SK Hynix

Global X Korea Semiconductor Top 10 ETF lists as wealth management push expands

Samsung Electronics 25%; SK Hynix 25%

Fund also holds eight top materials, parts and equipment firms

Mirae Asset pursues acquisition of a local brokerage

Deal would speed access to financial license

An exchange-traded fund holding Samsung Electronics and SK Hynix has listed in Japan. The launch gives Mirae Asset Group a channel to direct money from Japanese retail investors into South Korean semiconductor companies. Mirae Asset, which is accelerating efforts to acquire a Japanese brokerage, plans to use the product to target the fast-growing new NISA market, Japan’s tax-exempt small-investment program.

Japanese Investors Show Surging Interest in South Korean Chip Stocks

Global X Japan’s Global X Korea Semiconductor Top 10 ETF listed on the Tokyo Stock Exchange on Sept. 9, according to Japan Exchange Group. The Tokyo Stock Exchange approved the new listing on Aug. 20.

The ETF tracks the yen-converted FnGuide Semiconductor TOP10 Index, which is made up of 10 South Korean semiconductor companies. Samsung Electronics and SK Hynix each account for 25% of the portfolio, meaning half of the fund is invested in the two companies. The remaining 50% is allocated to eight leading companies in semiconductor manufacturing equipment, materials and parts.

Interest among Japanese investors in South Korean chip stocks has risen sharply as growth in the artificial intelligence industry boosts demand for memory semiconductors such as high-bandwidth memory, or HBM. Yugo Tsuboi, senior researcher at Daiwa Securities, said Japanese media are giving prominent coverage to the earnings of South Korean semiconductor companies, broadening their exposure to retail investors.

Global X Japan was established in 2019 as a joint venture between Global X, the U.S. ETF manager acquired by Mirae Asset Global Investments in 2018, and Daiwa Securities Group of Japan. Global X owns 50%, while Daiwa Asset Management and Daiwa Securities Group hold 40% and 10%, respectively. Through the venture, Mirae Asset has been expanding ETF offerings in Japan linked to U.S. technology stocks, Japanese semiconductor shares, high-dividend equities and covered-call strategies.

Combining ETF Products With a Local Brokerage Sales Network

Mirae Asset Group’s push to acquire a Japanese brokerage is tied to that ETF business. According to Japan’s financial industry, the group has selected one brokerage as its acquisition target and is now going through legal review procedures. Mirae Asset Group Chairman Park Hyeon-joo is leading the effort.

Launching a securities business from scratch in Japan takes considerable time because it requires regulatory approvals, computer system build-outs and customer acquisition. Buying an existing brokerage would allow Mirae Asset to secure a financial instruments business license, a customer base and a sales network in one step, shortening the time needed to enter the market.

Mirae Asset’s competitive strengths include developing global ETF products and providing wealth management services. The Global X NASDAQ100 Daily Covered Call ETF surpassed 50 billion yen in assets under management in just four months. After confirming the product’s appeal, the firm sees a local brokerage acquisition as a way to expand direct distribution and wealth management services.

Japan’s retail investment market has entered a period of structural growth since the introduction of the new NISA program, though ETF use has yet to become as active as it is in South Korea. Market participants say there is ample room for growth in the use of thematic and income ETFs by retail investors, as well as trading through mobile platforms. Mirae Asset plans to draw on the ETF product development capabilities and global investment network it built in South Korea and the U.S. to offer Japanese investors options beyond domestic stocks and traditional index funds. Park’s strategy is to strengthen a global wealth management network centered on four hubs: Wealthspot in the U.S., Stockspot in Australia, Sharekhan in India and Japan.

If the Japanese brokerage acquisition is completed, Mirae Asset will be able to combine its global ETF lineup with a local sales network and expand its wealth management business by attracting Japanese retail investor funds directly.

Tokyo - Choi Man-su, Korea Economic Daily correspondent bebop@hankyung.com