Korea Still The Most Attractive In Asia

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Korea Still The Most Attractive In Asia

Watch the video with Andrew Stotz or read a summary of the country profile on Korea.

Four Pillars of GDP: Trade deficit hurting GDP growth

Carlson Capital’s Double Black Diamond Adds 3.3% In August

Screenshot 2021 09 18 09.22.32Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More

Overall, the GDP growth in Korea is relatively slow but tracks other major OECD countries. Quite positive growth in private consumption, the main driver of the economy, was offset somewhat by a starkly negative trade deficit.

High EPS Growth Expected

Like years past, the infamous “Korea discount” remains a fact of life. Still, 2017’s expected price-to-earnings ratio of 9.6x is about 4 multiples lower than the 2016 average, so there may be value in that haystack.

Some investors may take a wait-and-see approach to the new political establishment. Jae-in Moon became president on 10 May 2017, following the impeachment of former president Geun-hye Park.

But the consensus EPS growth estimate for 2017 is a massive 40%, an attractive data point to be sure.

A. Stotz Four Elements: Korea is the most attractive market

Overall, Korea is the most attractive stock market in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.

Fundamentals: Poor due to low profitability.

Valuation: The “Korea Discount” remains a factor.

Momentum: Massive earnings growth and good price momentum.

Risk: High beta to Asia ex-Japan.

Strong performance in Materials and Consumer Discretionary

Top 3 largest sectors: Information Technology: 33% of the market; Consumer Discretionary: 14%; Industrials: 13%.

Best sector & stock: Energy: +17.5%, GS Holdings Corp.: +27.4%.

Worst sector & stock: Utilities: -0.7%, Korea Electric Power Corp.: -2.2%.

Article by Dr. Andrew Stotz, Become A Better Investor

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