What happens to a country ETF when a country declares martial law?

BY ANDREW GIOVINAZZI

December 4, 2024

Yo Pit Crazies,

Frank is back from his field reporting and I have to say it is great to have him back. China tosses on some restrictions to rare earth metals exports and boom boom things go flying. MP Materials Corp (Ticker: MP) jumps over 10% and it is a Flash10 holding. I originally found the name with Frank early in 2024. That Chinese proclamation made everything in the ground more valuable and we have a President-Elect that wants to use it. Politics Matter.

Let’s take the case of the iShares MSCI South Korea ETF (Ticker: EWY). The President of SK declared martial law and the legislative branch said no bueno. This political fight sent EWY down near 10% on the open.

Imagine an EU country opening down that much. Bedlam and chaos would ensue.

So the question is if EWY is a scoop down here or not.

Let’s see.

So does Donald say “Let’s make a deal?”

SK is heavy into exporting. For most of this year SK has underperformed and some of this political noise might be part of it. Whatever happened on Tuesday might be the end of the drama. Trump just wants better trade deals with exporting countries, SK being one of them since we fund most of the protection against NK.

I think this makes a decent put sale or even a risk reversal a la Income Hans. Either way politics is going to flow into the markets and I want to be there.

To Your Trading Success,