How to buy South Korean shares?
South Korea is a country that is very dependent on international trade and exports. When international trade is doing well, South Korea's shares are often performing great as well. In this article you can read how to trade South Korean stocks.
Where can you actively invest in South Korea?
It is important to go select a cheap party when you want to invest in South Korea. When you buy shares at too high a transaction cost, you immediately lose part of your return. But which brokers are the best to buy Korean stocks from?
If you really want to actively respond to the latest developments, PIus500 is a good option. With PIus500 you can place CFD orders at falling and rising prices. With CFD’s you have a lot of flexibility over your trading activity. Use the button below to instantly open a free account with PIus500:
72% of retail CFD accounts lose money.
Where can you buy Korean stocks?
You can also choose to invest directly in South Korea. You can do this for example by buying an ETF with which you follow the index of South Korea. A good broker to invest in South Korean shares is eToro, as you do not pay set commissions on stocks there. Use the button below to open an account with eToro:
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Pay attention to the exchange rate
It is important to keep an eye on the exchange rate of your currency in relation to that of South Korea. When your currency loses strength, you can quickly lose part of your investment. You can hedge this type of risk with options, for example.
In which Korean ETFs can you invest?
If you want to invest in the economy of South Korea in one fell swoop you can consider an ETF. An ETF is an investment product that follows a basket of shares. You can buy an ETF on these indexes:
- FTSE Korea 30/18: this index tracks South Korea’s largest companies, with the largest company having a maximum weight of 30% and others of 18%.
- MSCI Korea: this index tracks both large and mid-sized Korean shares.
- MSCI Korea 20/35: this index tracks large and mid-sized stocks. The maximum weight of the largest stock is 35% and of the other shares 20%.
Investing with emotion
In Asia, investors engage differently than Western investors. Investors look at cash flow rather than the fundamental position of a company. You saw this, for example, with the IPO of Big Hits Entertainment that manages South Korean boy bands. With a profit of 80 million, the company went public at a value of 4 billion.
However, an investment in a comparable company is risky: the focus is strongly on just one activity. What's more, many fans will buy the shares, and they will quickly sell them when the stock price drops sharply. Therefore, be careful with investments in South Korean stocks.
In short: your first investment in South Korea
Before investing, you must first open an account with an online broker. Make sure you choose a reliable party with relatively low transaction costs.
After you opened an account, you should study several Korean companies. It may be more difficult to find information, as many Western analysts pay little attention to Asia’s stock market.
As soon as you have found a stock you want to buy, you can place an order. Fill in for what amount you want to invest and possibly use a limit order. After you place the order, you can automatically buy your first Korean share.
Tip: Click here to view the opening hours of the South Korean stock exchange.
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