By Yoon Ja-young
Staff Reporter
The stock market will hit levels reached during the 2007 rally and the local currency will continue strengthening against the dollar this year, an international hedge fund manager investing in Seoul said Sunday.
Korea International Investment Fund manager Henry Seggerman said in an interview with The Korea Times that the KOSPI would surpass the peak reached in 2007.
``The KOSPI was at 2,085 at the end of 2007. It will certainly regain that level this year. We're only 20 percent below that today, and Korea's been known to jump 20 percent in a month. Goldman Sachs is forecasting the KOSPI will reach 2,300 in 2010,'' Seggerman said.
Launched in 1992, Korea International Investment Fund is the oldest hedge fund in Korea, and Korea's only directional long-short fund. It was up 38 percent in the last six months of 2009, beating the KOSPI by 6 percentage points.
Seggerman was especially positive about the tech-heavy KOSDAQ. ``We are focused on certain specific areas where we are convinced Korea will maintain a leading edge, such as state-of-the art display technologies like touchscreens and active matrix LEDs, longevity and convergence. We are overweight in the KOSDAQ, with firms including: Digitech Systems, ELK Corp, L&F Co., Ducksan Hi-Metal, Ubiquoss, Celltrion, Inspirit, and Infopia.''
Domestic consumption stocks, meanwhile, are overbought, according to the fund manager.
The New York-based Korean market specialist backed up the positive view on the country by the International Monetary Fund (IMF), which announced that it would grow faster than any of the world's 15 largest economies other than China and India over the next two years.
``It is no surprise Korea will grow faster than the United States, Europe and Japan. The big surprise is that BRIC-member Brazil will lag behind Korea. Korea's expected economic growth is outstanding, if you also take into consideration its per-capita gross domestic product, which is much higher than the BRICs. It's a developed market growing faster than many of the best-governed emerging markets,'' he said.
Seggerman explained that Korea's increasing exports to BRIC (Brazil, Russia, India and China) would help the export-driven economy sustain its momentum despite the jobless recovery in the United States.
``Korean exporters for decades have successfully sought out the sweet spot, which they find in markets with rapidly growing demand, but crucially, for products which are perfectly priced. You might think that the United States, Europe, and Japan (G3) are the principal buyers of technology, however, since the crisis Korea has begun exporting more tech products to the BRIC countries alone than to the G3. It's an amazingly adaptive strategy.''
He positively evaluated the government's handling of the global financial crisis. ``Korea of course weathered the Asian financial crisis 12 years ago, so they've been to hell and back, in terms of experience. For this reason, when the crisis erupted, the Koreans' stimulus package was very big and very effective. It's no wonder Korea will enjoy positive economic growth in 2010, unlike all those countries suffering contraction.''
Seggerman said foreigners are likely to continue buying Seoul stocks, when considering that foreign investment into Korea peaked at almost 45 percent in 2004 and drifted down for five years until just a few months ago when it rebounded sharply. ``I am convinced a lot of pent-up demand remains in this rebound of foreign investment into Korea,'' he said.
He said the Korean won is still undervalued. ``Despite Korea's financial stability relative to the United States, the crisis sent the won back up to 1998 levels, and it's been coming down to earth since March. It's still about 10 percent undervalued, especially with an overvalued yen.''