Game and Cosmetics ETFs Soar on Strong Earnings Performance

Recently, exchange-traded funds (ETFs) related to gaming and cosmetics have outperformed major indices. Strong first-quarter earnings have been the driving force behind the stock price increases. In contrast, semiconductor-related ETFs, which had experienced sharp gains, have been sluggish.

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According to the Korea Exchange on the 14th, Mirae Asset Management's 'TIGER GameTOP' ETF rose 12.65%, closing at 5,610 won on the previous day from 4,980 won on the 2nd of this month. During the same period, Timefolio Asset Management's 'TIMEFOLIO GameTOP10' also increased by 11.50%, while NH-Amundi Asset Management's 'HANARO Fn K-Game' and Samsung Asset Management's KODEX Game Industry rose 11.29% and 10.90%, respectively, ranking among the top ETF performers this month.

Cosmetics ETFs showed similar trends. TIGER Cosmetics and HANARO K-Beauty rose 9.36% and 7.76%, respectively. These performances surpassed the gains of the KOSPI and KOSDAQ indices. The KOSPI increased by 1.31% compared to the end of last month, while the KOSDAQ declined by 1.67% during the same period.

The rise in gaming and cosmetics ETFs is driven by strong earnings and positive expectations. Gaming stocks had experienced a downward trend due to poor performance of new releases. However, with robust first-quarter results and upcoming new releases, there is optimism that the previous slump can be recovered.

Choi Seung-ho, a researcher at Sangsangin Securities, said, "Most domestic gaming stocks exceeded consensus, recording the highest surprise rate among recent quarters," adding, "With the recovery of mobile game market payments, cost efficiency, and the emergence of mega-hits, the upward trend in gaming stocks is expected to continue from the second half of the year." He continued, "It is true that many anticipated titles are concentrated next year compared to this year, but considering that stock prices generally reflect new release schedules about six months in advance, the second half of the year is judged to be the time to accumulate gaming stocks."

In the case of cosmetics ETFs, export growth has had an impact. According to the Korea Customs Service, cosmetics exports in the first quarter of this year amounted to $2.3 billion (approximately 3.1765 trillion won), a 21.7% increase compared to the same period last year. Exports remained robust last month as well. Jo So-jung, a researcher at Kiwoom Securities, explained, "Exports excluding China also showed steady growth in April," noting, "Growth was observed in the United States, Europe, Japan, and Southeast Asia."

Silicon투's earnings growth had a particularly significant effect. Silicon투 recorded sales of 149.9 billion won and operating profit of 29.4 billion won in the first quarter, increasing 158% and 297%, respectively, compared to the same period last year. These figures exceeded market expectations of 110 billion won and 13 billion won. Silicon투 is a cosmetics specialized distribution company that directly purchases a wide variety of small-quantity Korean indie brand cosmetics and sells them to global consumers. Kim Myung-joo, a researcher at Korea Investment & Securities, explained, "The favorable stock price trend of small and mid-cap cosmetics stocks centered on Silicon투 has continued from last year to the present," adding, "The popularity of Korean indie cosmetics globally is steadily increasing."

On the other hand, semiconductor-related ETFs, which had shown excellent returns, have been sluggish this month. HANARO Semiconductor Core Process Stocks fell 5.66%, and Shinhan Asset Management's SOL Semiconductor Front-end Process also dropped 4.54%.

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