Investing in Emerging Markets in Asia

I have primarily been focusing on investment options in Indonesia, South Korea, and Taiwan, but there are a lot of other options in other emerging markets in Asia. Frontier market equities in Asia are intriguing, but typically difficult to access on US exchanges, as there are not always dedicated ETFs or ADRs for these markets. Furthermore, a lot of emerging market investment vehicles tend to focus heavily on China and India, which are attractive markets and focus less on smaller emerging markets because of market accessibility issues. However, smaller US retail investors are not bound by these rules and can invest in alternative options.

Investing in Taiwan on US Exchanges

If you want general exposure to Taiwan’s stock market and do not have specific sectors and stocks in mind, then investing in an ETF or closed-end fund may be the best option:

  • The iShares MSCI Taiwan Capped ETF ( EWT) invests primarily in tech and financial companies in Taiwan, and also invests in basic materials, industrials, and consumer stocks in Taiwan.
  • The Taiwan Fund ( TWN) invests in some of the similar industries and companies as the ETF. The main difference between this fund and the ETF is that this is a closed-end fund, which typically trades at a discount to NAV.

If you want to invest in individual companies, there are plenty of ADRs to choose from:

  • ASE Industrial Holding
  • AU Optronics
  • ChipMOS
  • Chunghwa Telecom
  • Himax Technology
  • Silicon Motion Technology
  • Taiwan Liposome
  • United Microelectronics

South Korea Options

I have spent time covering ETFs and closed-end funds in Asia, including South Korea, and typically recommend these two vehicles for investors who want to gain exposure to South Korea’s stock market:

  • iShares MSCI Capped South Korea ETF ( EWY): This ETF primarily invests in tech, financial and industrial companies in South Korea.
  • The Korea Fund ( KF): The Korea Fund is a closed-end fund that invests in similar industries in South Korea.

If you want to invest in individual companies, there are plenty of ADRs to choose from:

  • Gravity
  • KB Financial
  • Korea Electric Power
  • KT
  • LG Display
  • Posco
  • Shinhan Financial
  • SK Telecom
  • Woori Financial Group Inc.