Last week the country of South Korea won the right to host the 2018 Winter Olympics, beating out two other competitors. The win was a big one for the country as they will be back at the top of the sports world in a few years from now.
While it was good for the country and its sports industry, it could also benefit a number of different sectors. From an investing standpoint I want to take a look at how the Olympics coming to South Korea could be a moneymaking opportunity. The obvious sectors that will benefit in the years heading up to a major event such as the Olympics would be infrastructure and materials. (For related reading, see Build Your Portfolio With Infrastructure Investments.) But there are also opportunities tied to tourism and the leisure sectors (hotels, restaurants, etc.).

TUTORIAL: Exchange-Traded Fund (ETF) Investing

South Korea ETFs
There are two ETFs that give investors broad based exposure to the country of South Korea and both are distinctively different. The most popular is the iShares South Korea ETF (NYSE:EWY), which has been around since 2000. The ETF is composed of 105 stocks based in South Korea and the top 10 is composed of some of the largest companies in the country.

About one-fourth of the ETF is composed of stocks in the information technology sector, followed by 19% in consumer discretionary, 17% in industrials and 16% in materials. One of the largest holdings is steel company POSCO (NYSE:PKX), a potential beneficiary of a boom in new buildings within the country. Shinhan Financial (NYSE:SHG) is also a top holding and could benefit from new lending for the new projects that must be undertaken to prepare for the games. The ETF charges an annual expense ratio of 0.61%.

Local Business
Investors looking for more exposure to companies that rely on South Korea for sales should consider the IQ South Korea Small Cap ETF (NYSE:SKOR). The ETF is composed of 97 small cap stocks that are based in the country and charges an expense ratio of 0.79%. The ETF is heavily concentrated on the industrials with 34% of the allocation in the sector. Consumer discretionary makes up 16% and financials account for 15%, along with technology.

Due to its exposure to the small cap sector, the ETF will give investors the opportunity to invest in companies otherwise not available via US exchanges. The other factor that differentiates SKOR from EWY is that the stocks in SKOR are not the large multinationals that rely on other countries for revenue. A large portion of the stocks in SKOR generate their sales from within the borders of South Korea, which is a positive when playing the Olympics win.

South Korea Today
With the Olympics seven years away it may seem a bit early to invest in South Korea for that factor. I agree, but this is a country to keep an eye on in the next couple of years as the plans for the games begin to unfold.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares Asia 50

    Read more about BlackRock's iShares Asia 50 Fund, an ETF that follows the four "Asian Tiger'' nations plus China.
  2. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  3. Mutual Funds & ETFs

    ETF Analysis: WisdomTree International LargeCp Div

    Learn more about the WisdomTree International LargeCap Dividend fund, an income-based international equities ETF that focuses heavily on the United Kingdom.
  4. Mutual Funds & ETFs

    ETF Analysis: United States Gasoline Fund

    Learn about the United States Gasoline Fund, the characteristics of the exchange-traded fund, and the suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: United States 12 Month Oil

    Find out more information about the United States 12 Month Oil ETF, and explore detailed analysis of the characteristics, suitability and recommendations of it.
  6. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Nasdaq Biotechnology

    Find out information about the ProShares Ultra Nasdaq Biotechnology exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
  7. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily S&P Biotech Bull 3X

    Learn more about the Direxion Daily S&P Biotech Bull 3x exchange-traded fund, a new triple-leveraged ETF tracking biotechnology equities.
  8. Mutual Funds & ETFs

    ETF Analysis: First Trust Health Care AlphaDEX

    Learn more about the First Trust Health Care AlphaDEX exchange-traded fund, an indexed fund that uses an advanced stock selection methodology.
  9. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI Emerging Mkts

    Learn more about the PowerShares FTSE RAFI Emerging Markets ETF, a fundamentally weighted fund that tracks emerging market equities.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Cali AMT-Free Muni Bond

    Learn more about the iShares California AMT-Free Municipal Bond exchange-traded fund, a popular tax-advantaged ETF that dominates its category.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. Lion economies

    A nickname given to Africa's growing economies.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!