Barings sees Korean equities prospects promising

The Korea Times

The Korea Times

Finance

Wed, September 27, 2023 | 05:22

Economy

Barings sees Korean equities prospects promising

Posted : 2018-03-20 19:20

Updated : 2018-03-21 09:30

Barings Global Emerging Markets Equity Team Director William Palmer speaks during a press conference at the Conrad Seoul Hotel in Seoul, Tuesday. / Courtesy of Barings

By Jhoo Dong-chan

A global asset management firm painted an upbeat outlook for the Korean stock market Tuesday, citing the declining geopolitical risks associated with North Korea and strong corporate performance.

In a press conference, Barings Global Emerging Markets Equity Director William Palmers said there will be increasing opportunities in the nation's equity market along with the successful inter-Korea talks and possible summit between the U.S. and North Korea.

"Korea's equity market has been underrated due to weak corporate structure and political tension between North and South Korea," Palmer said.

"However, the current situation in Korea is very promising. Such a peaceful mood will boost inflow of foreign investments into the country. Especially, Barings is paying attention to Korea's banking sector."

Palmer also said the recent depreciation of Samsung Electronics shares doesn't concern him at all.

"Barings did not sell Samsung shares. Samsung Electronics shares have been depreciated due to weaker memory chip prices, but we still believe Samsung will enjoy its market leader's position," he said.

During the press conference, Palmer claimed emerging markets have hit the bottom and will enjoy an upturn for years.

"Emerging markets had enjoyed its upturn in equity between 2003 and 2010, but then started declining from 2011. The figure shows the markets seem to have hit the bottom from 2016. The question here is: is it a short-term rebound, or a long-term rally?" he said.

"We should look into corporate profits in emerging markets for the answer. Corporate earnings declined as each year reached an end between 2011 and 2015. Entering 2016, however, corporate profits remained strong throughout the whole year. They are also successful in controlling production costs. I believe emerging markets will enjoy a strong rally for years."

He admitted a possible U.S. interest rate hike could be an obstacle for the rise of emerging markets in equity, but claimed the effect will be minimal.

"In the past, emerging markets depended heavily on foreign direct investments, and so were often hit hard by the U.S. interest rate hike. But their fundamentals, including trade and domestic, have become stronger," he said.

"The possible hike won't jeopardize the rise of emerging markets in equity. Some worry that their backward economic system would hamper return on investment, but emerging markets are improving in financial structure. Educational and industrial infrastructures are also improving. These are strong fundamentals that will help their economic development."

jhoo@ktimes.com