'Carbon Emission Allowance ETF' That Skyrocketed Two Months After Listing

High Returns Two Months After Listing
Strong Momentum Continues as Carbon Economy Gains Traction

[Asia Economy Reporter Song Hwajeong] Carbon emission allowance-related exchange-traded funds (ETFs) listed at the end of September are showing strong performance with high returns just two months after listing. As carbon emission allowance prices are expected to continue rising, the strength of related ETFs is also anticipated to persist.

According to the Korea Exchange on the 25th, KODEX Europe Carbon Emission Allowance Futures ICE (H) recorded the highest return among all ETFs, rising 17.54% this month up to the previous day. SOL Europe Carbon Emission Allowance Futures S&P (H) rose 17.3%, HANARO Global Carbon Emission Allowance Futures ICE (Synthetic) increased by 15.88%, and SOL Global Carbon Emission Allowance Futures IHS (Synthetic) went up 15.6%, sweeping the top four spots in returns among carbon emission allowance ETFs. These four stocks were the first carbon emission allowance ETFs listed domestically, all debuting simultaneously on September 30.

Recently, carbon emission allowance prices have shown strength, hitting record highs, which is interpreted as driving the rise in related ETFs. The European Union (EU) carbon emission allowance price surpassed 70 euros per ton on the 22nd, marking an all-time high.

As the carbon economy is expected to fully take off, interest in carbon emission allowances as an investment asset is likely to expand further. At the recently concluded 26th United Nations Climate Change Conference of the Parties (COP26), UN climate change parties agreed on various issues amid the climate crisis, including the phased elimination of coal power, removal of obstacles to global carbon emission allowance trading, and the establishment of climate change response funds. KB Securities researcher Kim Junseop stated, "One of the key indicators for responding to climate change is reducing carbon emissions, and countries are focusing on carbon pricing systems (carbon emission allowance trading, carbon tax, etc.) to achieve this," adding, "Following COP26, the carbon economy is expected to accelerate, leading to increased interest in carbon emission allowances and a sorting out within sectors with high carbon emissions."

The carbon emission allowance market is expected to see supply decrease while demand increases, suggesting that the upward trend in carbon emission allowance prices will continue. Researcher Kim said, "Carbon emission allowance prices have grown at an average annual rate of 37% over the past three years, and the Sharpe Ratio (an indicator showing the degree of excess returns from investing in risky assets) was 0.79, outperforming other asset classes," adding, "Nevertheless, considering supply and demand, carbon emission allowance prices are highly likely to rise further in the future."

This content was produced with the assistance of AI translation services.