Tabbas Yaftali Posted on 5:07 am

Korea’s Rising Stocks to Watch

South Korea is undoubtedly one of the most vibrant economies in the globe. With the world’s fastest broadband speeds, and a strong digital economy across commerce, education, entertainment and government, it is one of the world’s most technologically advanced economies. Despite an inherent hindrance to doing physical business due to their complex immigration system, it is a lucrative market if you are interested in international share trading. It goes without saying that in the digital age we live in, you do not have to have your two feet planted on Korean soil to do so, you can do so from anywhere in the world.

South Korea comes with a plethora of opportunities due to their free trade agreements, grants and tax breaks which boost investing from overseas. Local businesses are not left out of the banquet, enjoying advantages such as subsidies on costs of industrial premises and a financial helping hand with expenses for start-ups. This amplified by a vast domestic market with sophisticated consumers driving demand. With a geographical advantage of proximity to the huge markets of China and Japan and an established a global FTA network that connects U.S., ASEAN and EU the world has definitely taken to it without reservation, for over half of the Global Fortune 500 companies have invested in Korea.

As if that is not enough, worth notable mention, the “Korean Wave”, a name ascribed to the growing popularity of all things Korean. Everything from fashion and couture, cosmetics and beauty, film, music to cuisine, has been largely gaining acclaim all corners of the world.  The name “K-pop” resonates worldwide, as the colourful pop genre with its genesis in South Korea continue to spread across the world like wildfire.  This worldwide Korean cultural popularity creates unprecedented business potentials for one who is looking to diversify their portfolio and to tap into one of the fastest growing economies in the world.

Korea can provide access to some of the leading companies at the forefront of growth and technological innovation, being already competitive in shipbuilding, electronics and fast-growing automotive industries. Among the already powerful stock giants hailing from the Korean nation include international technology powerhouse Samsung Electronics, Hyundai Motors, Lumimicro, Seojin System, Ssangyong Motor, Semicon Light, Posco and Pan Entertainment, just to name a few. Moving to the some of the emerging stocks, Korea is by far the cheapest market in Asia and has the strongest earnings tailwinds. One industry to look at is Healthcare, with what was dubbed as “the biggest potential” for growth in Asia by said Kim Jae-Hyun, a fund manager at Mirae Asset whose healthcare fund made 64 percent in 2017.”In 2018, some healthcare companies, especially those that can export their technology, could be targeted,” Kim said. Celltrion Inc., which soared 81 percent this year, produces FDA-approved drug Remsima, a biosimilar of Johnson & Johnson’s blockbuster Remicade.

A similar expected growth is being seen in Cosmetics as well, Sam Le Cornu, co-head of Asian equities at Macquarie Investment Management in Hong Kong, said Korean healthcare and cosmetics companies are “very-high quality and robust in terms of their margins and earnings power.
Seoul’s rally has been driven by tech stocks like Samsung Electronics (up 53% last year; LG Electronics (066570.Korea), up 71%; and SK Hynix (000660.Korea), up 74%, while other names like cosmetic brand owners like Amorepacific (090430.Korea) and LG Household & Health Care (051900.Korea)—as well as Korea Kolmar (161890.Korea) and Cosmax (192820.Korea), which make ingredients for global cosmetics players—have been among the laggards.

SK Hynix, the second-largest memory chip player in the world behind Samsung, is a big favourite among analysts. Another analyst favourite is Hotel Shilla (008770.Korea), which runs a chain of upscale hotels as well as duty-free shops. Growth in tourism and improving margins are helping Shilla’s bottom line, notes Cara Song, Nomura’s consumer analyst in Seoul. Song has a KRW110,000 price target for Shilla, a 56% upside.

These are among the rising stocks to watch in Korea performance last year. With big gains set for this year’s first and last two quarters. These are just among the few among the stocks to watch in Korea, which are critical if you are interested in investing in offshore stock trading.