South Korea has been entangled by political tensions with North
Korea after a military scuffle on the seas. Observers believe that
a possible escalation of war between the two countries could prove
to be detrimental to South Korea's economy and constrain related
exchange traded fund (
A few weeks back, a South Korean navy patrol boat was sunk, and
it is now believed that the boat was sunk by a torpedo launched by
writes Don Dion for TheStreet
. The South Korean President Lee Myung-bak has vowed retaliatory
What a Stronger Yuan May Mean.
The South Korea ETF
iShares MSCI South Korea Index (NYSEArca:
has been trading sideways ever since the incident, despite
optimistic reports about the current state of the country's
For example, Korean automakers Hyundai Motors and Kia Motors
have both reported strong sales numbers due to increased sales
abroad, and domestic sales are also improving. Samsung also
announced robust first-quarter earnings that beat estimates, and
the company is expanding production, betting on higher future
Opportunity Knocking in South Korea?
Dion believes that EWY will remain relatively flat until a
political decision is made in the government's response for this
situation. If South Korea pursues sanctions against North Korea and
not military action, EWY could move upward as business returns to
normal, adds Dion.
For more information on South Korea, visit our
South Korea category
Max Chen contributed to this article.