Last Year's Top-Performing Game ETF, This Year’s Biggest Decline Humiliation

[Asia Economy Reporter Kwon Jaehee] Among the exchange-traded funds (ETFs) that posted the highest returns last year, the game-related ETFs have recorded the largest decline this year.

According to the Korea Exchange on the 13th, the ETF 'KODEX Game Industry' fell by 29.65% from the beginning of this year through the 11th.

In terms of decline rate, it ranks behind BBIG (Battery, Bio, Internet, Game) related ETF 'TIGER KRX BBIG K-New Deal Leverage' (-37.01%) and 'TIGER KOSDAQ150 Leverage' (-36.67%), which tracks the KOSDAQ150 index.

Excluding leveraged ETFs that track index fluctuations at twice the rate, it is the largest decline.

Following this, ETFs such as 'HANARO Fn K-Game' (-28.24%), 'TIGER K-Game' (-27.71%), 'KBSTAR Game Theme' (-27.28%), and 'TIGER KRX Game K-New Deal' (-27.17%) also ranked low in returns.

This contrasts with last year when 'KBSTAR Game Theme' and 'TIGER K-Game' surged 68.99% and 67.72%, respectively, ranking just behind 'KINDEX Bloomberg Vietnam VN30 Futures Leverage (H)' (74.97%) and 'KBSTAR US S&P Oil Production Companies (Synthetic H)' (74.37%) in highest gains.

The game-related ETFs, which recorded the highest growth last year due to expectations for new businesses such as non-fungible tokens (NFTs) and the metaverse, have been struggling this year.

The background to this is attributed to a stock market environment unfavorable to growth stocks.

As the U.S. Federal Reserve (Fed) is expected to accelerate tightening to curb inflation, market interest rates are rising across the board.

Additionally, the discount rate on future earnings has increased, impacting growth stocks.

In this situation, individual companies’ earnings have failed to inspire market confidence, putting further downward pressure on stock prices.

Game company Krafton, which announced earnings on the 11th, saw its stock plunge 12.79% due to results below market expectations, hitting its lowest price since listing.

Wemade’s core game business posted weak results, causing its stock to fall 36.09% over two days starting from the 10th.

Last year, Wemade surged 814.70%, and its affiliate Wemade Max rose 1502.76%, ranking among the highest gainers in the KOSDAQ market.

Krafton is a stock invested in by most game-related ETFs. Wemade is currently included in ETFs such as 'KODEX Game Industry', 'TIGER K-Game', and 'KBSTAR Game Theme'.

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