Three major South Korean K-pop ETFs declined 30-40% from January 2 to July 6, with ACE KPOP Focus falling 32.51%, TIGER Media Contents dropping 41.65%, and HANARO Fn K-POP&Media declining 34.74%, according to Korea Exchange data. The funds' poor performance reflected sharp declines in Big 4 entertainment stocks (HYBE, SM, JYP, YG), which suffered from weak artist activity and investor preference for semiconductor stocks during the AI boom. Entertainment/culture indices recorded the worst performance among all sectors on both KOSPI (down 27.41%) and KOSDAQ (down 38.41%), even as KOSPI rose 81.68% overall.
K-pop ETFs Record 30-40% Losses in First Half of 2026
According to Korea Exchange data from January 2 to July 6, K-pop related ETFs posted returns in the negative 30% range, the lowest level among equity ETF themes. By net asset value, ACE KPOP Focus declined 32.51%, TIGER Media Contents fell 41.65%, and HANARO Fn K-POP&Media dropped 34.74%.
All three ETFs primarily hold Big 4 entertainment companies: HYBE, SM Entertainment, JYP Entertainment, and YG Entertainment. As of July 7, ACE KPOP Focus maintained approximately 95% exposure to the Big 4, while HANARO Fn K-POP&Media held 77.36% and TIGER Media Contents held 45.76%.
The weakness in entertainment stocks directly impacted ETF returns. HYBE declined from 346,000 won to 232,000 won during the six-month period from January 2 to July 7, a 32.94% drop. SM Entertainment fell 38.14%, JYP Entertainment declined 29.81%, and YG Entertainment dropped 37.21% over the same period. Closing prices peaked at the beginning of the year, with no meaningful rebound throughout the first half.
Entertainment Stocks Underperform KOSPI and KOSDAQ Indices
The entertainment sector's weakness stood out even when compared to overall market performance. KOSPI rose 81.68% since the beginning of the year, while the KOSPI entertainment/culture index fell 27.41%. KOSDAQ declined 10.18% during the same period, while the KOSDAQ entertainment/culture index dropped 38.41%.
The KOSPI entertainment/culture index recorded the worst performance among major sector indices tracked by the KOSPI market. The KOSDAQ entertainment/culture index also posted the steepest decline amid overall KOSDAQ market weakness. Entertainment stocks were the worst performing sector in the first half of 2026.
Experts Attribute Decline to Weak Artist Activity and Semiconductor Fund Flows
Experts assessed that entertainment stocks underwent severe correction and remain in deeply undervalued territory. They attributed the decline to weak major artist activity, HYBE's stock price weakness reducing investment appeal, and intensified concentration in large-cap KOSPI stocks.
Kim Seung-chul, Head of ETF Investment Division at NH-Amundi Asset Management, stated: "BTS's comeback performance in March did not perform as well as expected, and the weakness of HYBE, the leading stock, brought about a simultaneous decline in entertainment stocks overall. In addition, YG's prolonged absence of BLACKPINK, SM's lack of large tour artists, and the disappearance of expectations for the lifting of the Korean Wave ban in China also affected the sluggishness of entertainment stocks."
Lee Jong-hoon, Head of ETF Management Division at Korea Investment Trust Management, explained: "The cause of poor ETF returns was the decline in K-pop entertainment company stock prices, and there was a gap between external growth and profitability. In the case of HYBE, the leading stock, sales themselves surged, but operating profit actually fell 74%, and concerns that profitability could deteriorate due to operating costs and margin pressure are understood to have affected stock price declines and ETF returns."
The semiconductor sector's fund absorption amid the AI supercycle also contributed. Kim Seung-chul noted: "Market funds concentrated on semiconductors as explosive earnings growth and growth potential of semiconductor and AI infrastructure-related companies were highlighted in the first half. In contrast, K-pop and entertainment companies continued to underperform as their investment appeal was not significant compared to these sectors."
K-pop ETFs Show Recovery Signs in Early July
Expectations emerged that investment appeal could be highlighted again as entertainment stocks overall are undervalued. K-pop entertainment ETF returns have been rising as semiconductor stocks that absorbed funds recently underwent correction.
ACE KPOP Focus's return over the past week was 11.90%. TIGER Media Contents recorded 5.05%, and HANARO Fn K-POP&Media recorded 11.05%. Returns on July 7 were also positive: ACE KPOP Focus 4.51%, TIGER Media Contents 2.90%, and HANARO Fn K-POP&Media 4.17%.
On that day, KOSPI plunged as profit-taking selling poured out despite Samsung Electronics announcing strong earnings. In contrast, entertainment stocks rose as investors flocked to them. HYBE's stock price closed at 232,000 won, up 7.91% from the previous trading day. SM Entertainment rose 6.09%, JYP Entertainment increased 0.93%, and YG Entertainment gained 1.49%.
Lee Jong-hoon stated: "Currently, the entertainment sector is undervalued relative to PER (price-to-earnings ratio), and expectations are growing that numerous world tours and large-scale concerts scheduled for the second half can drive earnings, while new artists including BTS are establishing themselves as growth pillars and monetization potential is increasing. If depressed investor sentiment eases and second-half earnings momentum is confirmed, we can expect a rebound across the sector."
FAQ
Why did K-pop ETFs decline over 30% in the first half of 2026?
K-pop ETFs declined 30-40% from January 2 to July 6 due to sharp drops in Big 4 entertainment company stocks (HYBE, SM, JYP, YG), which fell over 29% each. The decline stemmed from weak artist activity momentum, HYBE's 74% operating profit drop despite revenue growth, and intensified investor preference for semiconductor stocks during the AI boom. The entertainment/culture sector recorded the worst performance among all KOSPI and KOSDAQ sector indices during this period.
What caused the recent recovery in K-pop ETF performance?
K-pop ETFs showed recovery in early July, with ACE KPOP Focus gaining 11.90% over one week and 4.51% on July 7. The rebound occurred as semiconductor stocks underwent correction and investors shifted funds back to undervalued entertainment stocks. On July 7, HYBE rose 7.91%, SM Entertainment gained 6.09%, and other Big 4 stocks posted gains, even as KOSPI declined on Samsung Electronics profit-taking.
