Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investing in South Korea Today Like Buying U.S. in 1990s, Brewing Tech Boom

Companies / Tech Stocks Jan 21, 2013 - 02:13 PM GMT

By: Money_Morning

Companies

Martin Hutchinson writes: If you're tired of the crisis a month routine we've seen with the United States and the Eurozone, there's always South Korea.

In fact, for demographic and budgetary reasons, South Korea is much like the United States was during the prosperous 1990s--not the deficit-ridden, slow-growing place the U.S. has become.


The truth is South Korea, has very little foreign debt, and recently re-elected the pro-business party by a comfortable margin. What's more, South Korea has kept its government the smallest in the OECD club of rich nations.

So if you haven't considered investing in South Korea you should.

Here's why...

The Brewing S. Korean Tech Boom
Like the U.S. in the late 1990s, though obviously on smaller scale, South Korea has become a technological leader-- especially in display systems like portable computers that can be rolled up like a newspaper and stem cell biotech innovations.

Indeed, its lead in genetic engineering may become more strategic in nature, since Korean public policy does not place the limitations on biotech innovation that the United States does.

What's new is that South Korea is now also a cultural leader, with its "Gangnam Style" pop phenomenon sweeping the world. That's small potatoes in terms of immediate revenues, but it does allow Korea to attract the young, style-conscious and footloose (among whom are many of the world's innovators) in a way it could never have done twenty years ago.

Currently,Korean growth is solid rather than exciting, with The Economist team of forecasters projecting 3.4% growth in 2013.

Nevertheless, with public spending only 33% of GDP compared to 40% in the U.S, a balance of payments surplus and inflation currently running at 1.2% and short-term interest rates well above inflation at close to 3%,

South Korea' economy is poised for a growth acceleration in a way the U.S. economy is not.

With elections out of the way for another 4 years and rapid growth in its huge but poor Chinese neighbor, faster growth should be heading Korea's way.

A Fiscally Fit Government
But those aren't the only reasons to invest. Based U.S. accounting methods, South Korea also runs a budget surplus.

Admittedly, Korea-skeptics like to point out that if you exclude social security, the country runs a deficit of around 0.5-1% of GDP. But if you exclude social security, the United States didn't run a surplus in the late 1990s either.

Like the U.S. in the 1990s and for similar demographic reasons, South Korea actually runs a surplus of 2.5-3% on its social security account since considerably more people are paying into the account than are drawing from it.

Including that surplus, South Korea will run a surplus of 1.5-2.0% of GDP in 2012.

That means the South Korea stands to benefit from its baby boom being a decade or so from retirement, the same way the U.S. benefited from its boomers in the late 1990s.

But you should also note that South Korea's budget is also at least as solid as the U.S. budgets from the1990s. Including social security contributions, Korea has managed to run a surplus in an international environment that is certainly not as bullish as it was the latter 1990s.

What's more, the KOSPI share index is still below its 2007 highs, compared to the late 1990s when U.S. indexes were running at more than double their peak pre-1995 levels.

Three Ways to Invest in South Korea
There are number of ways to play the South Korean market. Here are three:

The largest Korea-oriented ETF listed in the U.S. is the iShares MSCI South Korea Index ETF (NYSE:EWY).

With net assets of $3.34 billion and an expense ratio of only 0.61% EWY is an efficient way of getting exposure to the market as a whole. Currently it has a P/E ratio of only 9 times earnings but a yield of only 0.6%

Korean banks are also very reasonably valued in terms of net assets, yet are currently nicely profitable. The largest is KB Financial Group (NYSE: KB) the parent group of Kookmin Bank. It is currently trading at only 64% of book value and 6.6 times projected 2013 earnings. Based on last year's dividend it yields about 3.2%.

And as mentioned above, Korea is a world leader in display technologies and its leading company is LG Display (NYSE: LPL). LPL has suffered in 2011-12 from a cyclical downturn, but its third quarter 2012 was once again profitable, and based on analysts' estimates it should make about $1.50 per share in 2013, putting it on a forward P/E of 9.3 times.

Source :http://moneymorning.com/2013/01/21/investing-in-s-korea-today-is-like-buying-the-u-s-the-1990s/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in