The U.S. exchange-traded fund that tracks South Korean stocks erased its gains from Tuesday’s session on a report that North Korea can now fit nuclear weapons into missiles.

The iShares MSCI South Korea capped ETF (EWY) was trading 0.1 percent higher before the news broke. At 1:31 p.m. in New York, it traded at 0.36 percent lower.

The Washington Post first reported the news, sparking the dive in the ‘EWY’, and the report was later confirmed by NBC News. The report comes less than two weeks after the North Korean government tested an intercontinental ballistic missile that could reach as far as New York.

“Korean asset markets have performed strongly this year, but are starting to look more fragile,” said Callum Henderson, an analyst at Eurasia Group, in a note.

The ‘EWY’ and the Kospi index, South Korea’s benchmark stock index, have handily outperformed the S&P 500 this year, advancing 29.8 percent and 18.2 percent respectively. The S&P 500, meanwhile, has risen 10.9 percent.

The ETF’s largest holdings include Samsung Electronics, SK Hynix and Posco.

Henderson also pointed out that South Korea’s currency, the won, has been the worst-performer in Asia against the dollar since July 21. In that time period, the Won has fallen 0.8 percent against the greenback.

—CNBC’s Evelyn Cheng contributed to this report.

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