Play a second-quarter rebound in South Korea with this leveraged ETF
A the rising dollar and global inflation could prevent traders from looking for potential opportunities in emerging markets (EM). However, they need to take a closer look at South Korea.
After Covid-19 cases and rising inflation dampened South Korea’s economy in the first quarter, a second-quarter comeback could be in play. There are already signs of a recovery surfacing.
“We are already seeing the first signs of a recovery in private consumption as the government lifts most restrictions while the trade balance will run into a deficit for a few months in the near future,” ING economists said.
Much of South Korea’s growth can be attributed to wise capital investment. Macroeconomic stability may have provided a cushion against economic shocks, such as the Covid-19 pandemic.
South Korea’s growth prospects are already threatening the third largest economy, Japan. Growth projections from the International Monetary Fund (IMF) show that South Korea could overtake Japan’s real GDP per capita by an even wider margin (it overtook Japan four years ago).
“By 2026, the International Monetary Fund predicts that South Korea will be 12% ahead of Japan,” said an article from the East Asia Forum. “What makes this event all the more important and illuminating is that South Korea shares so many of Japan’s structural flaws. South Korea’s ability to improve on those flaws provides lessons for Japan.”
“South Korea has overtaken Japan because its productivity growth has overtaken Japan,” the article adds. “Until the early 1990s, Japan was rapidly catching up with the United States. Its productivity peaked at 71% of the US level in 1997. Since then, it has fallen back to just 63%. grow and is only a few percentage points behind Japan.”
Playing South Korea’s Growing Economy
As South Korea projects a bullish trend, traders can gamble on its growing economy by using leveraged exchange-traded funds (ETFs) such as the Direxion Daily South Korea Bull 3X Shares (KORU).
KORU targets daily investment results equivalent to 300% of the daily performance of the MSCI Korea 25/50 Index. The index is designed to measure the performance of the large and mid-cap segments of the South Korean stock market, covering approximately 85% of the float-adjusted market capitalization of South Korean issuers.
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