By Park Hyong-ki
Staff Reporter
Seoul stocks are expected to attract an increasing number of global investors going forward on rosy economic outlook and improving market transparency.
Mark Mobius, executive chairman of Templeton Asset Management, strongly believes the value of Seoul stocks will rise further, buoyed by a growing interest of companies transforming into holding company structures.
``One trend in Korea that is giving us more confidence is the trend of (companies) moving away from chaebol structure to holding company structures,'' Mobius told a press conference in Seoul. ``This will give more confidence to investors as it boosts transparency in the market.''
Initially, Mobius was pessimistic about Seoul shares due to poor transparency and governance, marred by chaebol, or family-run conglomerates.
However, he said his views have changed as more companies are shifting to holding company structures and internationalizing their businesses by expanding ties with rapidly growing emerging markets such as China and India.
``Chaebol discount will disappear,'' he said.
Although Samsung, the largest chaebol, decided not to become a holding company following the resignation of Lee Kun-hee, Mobius noted that the attitude of the company has certainly changed, forecasting that ``it will be in better shape going forward.''
He puts Korea as the third-most important destination for equity investment after China and India. Mobius said Seoul shares are attractive as they are cheaper than other emerging market stocks.
Another factor that is likely to boost Seoul stocks is the government's pro-policy toward privatization. ``If the government policy of privatization moves ahead, which I think it will, Korea's importance will not only increase in capital markets but also globally.''
He projects the economy to pick up speed once the subprime problem in the United States is fixed. He does not think Korea's average 4 percent GDP growth is a low figure, considering its economic size.
``The Korean economy is doing quite well,'' said Mobius, adding that subprime will not impact emerging markets as financial firms in the region were not heavily involved in U.S. mortgage instruments.
The other factor that is critically important for the growth of Seoul stocks is the development of the Indian market, he said.
Although China is Korea's leading trade partner, Korean companies that spend time and effort to boost trade relations with India will see further growth.
``India has 1 billion people. Its per capita income is moving up. Those who get into India will reap benefits, and Korean companies are well placed to work with India,'' Mobius said.
Overall, he is optimistic about emerging market stocks as rising consumer spending in the region is driving the economy forward.
During a seminar at the Global Investors Conference hosted by Samsung Securities, Mobius recommended materials, chemicals, consumer services, semiconductor, bank retail and utility shares for investment.
Asked when is the best time to invest, ``I always tell people the best time is when you have money!'' quipped Mobius.
phk@koreatimes.co.kr