Weekly Commentary - Global investors are rushing into South Korea
Attracted by relatively cheap equity prices and the nation’s healthy finances, global investors are buying assets in South Korea. There have been $13.1 billion net inflows into the market since July, which were more than net outflows of $9.4 billion in the first half this year.
Different with previous purchasing activities from oversea, this time investor is not favor on some Korea’s biggest enterprise only, such as Samsung Electronics and Hyundai Motor, but they also interest on smaller and lesser known firms. The number of firm visit requests has risen 50% in second half year, according to Korea local securities dealer.
Relatively cheaper price is the main factor of investors move. The benchmark Kospi Composite index is up only 2.6% this year, however, Nikkei index rise 41.2%. Korea’s equities are relatively cheap, which is trading at just 11.5 times forward earnings, by comparing to Japan’s (20 times) and Philippines’ (18.6 times). Analysts regard those asset still have further room to growth. In addition, the health finances also attract investor came. South Korea has recorded trade surpluses for 19 consecutive months and shows a sign of growth.
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