Shinhan Asset Management
Shinhan Asset Management’s K-beauty exchange-traded fund posted the highest one-month return among all ETFs listed in South Korea, driven by strong earnings at domestic cosmetics companies and wider export markets.
The SOL Cosmetics TOP3 Plus ETF rose 47.3% over the one-month period through the 31st of last month, the best performance among ETFs listed in the country, according to the Korea Exchange on the 2nd. Retail investors bought a net 16.8 billion won ($12.4 million) worth of the fund over the same period, while net assets grew by 58.5 billion won to 123.1 billion won.
The ETF allocates about 60% of its holdings to three core stocks: Silicon2, Kolmar Korea and APR. It also holds original development manufacturers such as Cosmecca Korea and Cosmax, along with brand companies that generate a large share of revenue overseas, including Amorepacific and Dalba Global.
Volatility in the domestic stock market has widened recently on external factors such as higher global oil prices and rising U.S. Treasury yields, leaving share performance uneven across sectors. Cosmetics stocks stood out with a relatively strong advance, supported by export growth and improving earnings.
A key driver has been the rapid shift in the business structure of Korean cosmetics makers, which once concentrated on China and duty-free shops and are now expanding into the United States, Europe and Japan. Sales channels have also broadened from online platforms to global offline specialty stores, reducing dependence on any single country or distribution channel, analysts said.
Earnings gains are spreading across the value chain. Cosmax topped 500 billion won in quarterly revenue for the first time, and Kolmar Korea became the first company in the domestic ODM industry to post quarterly operating profit above 100 billion won. Cosmecca Korea and Silicon2 also exceeded 200 billion won and 400 billion won in quarterly revenue, respectively, as both manufacturers and distributors extended their top-line growth.
“K-beauty has entered a new phase of growth, different from the past, as globally successful products diversify and the ODM and distribution companies behind them grow alongside,” said Kim Jung-hyun, head of the ETF business group at Shinhan Asset Management. “In an environment of rising market volatility, investors need to be selective and focus on sectors that demonstrate growth through actual earnings improvement.”