AllianceBernstein positive about Korean stock market

AllianceBernstein executives speak during an online press conference, Tuesday. Clockwise from top left are senior portfolio manager Yoo Jae-heung, senior investment strategist David Wong and Korean subsidiary CEO Lee Chang-hyun. Courtesy of AllianceBernstein

By Park Jae-hyuk

AllianceBernstein remained quite positive in terms of its outlook on the Korean equities market, categorizing the country as one of the developed nations with a strong outlook to bounce back this year from global coronavirus-induced economic problems.

Its rationale is based specifically on the country's equities market which is looking constructive in terms of stock market returns and economic recovery.

“Korea is still ultimately sensitive to the global growth,” AllianceBernstein's senior investment strategist David Wong said in an online press conference, Tuesday. “The global growth in developed markets remains strong, so we have a constructive perspective on Korea.”

A number of Korean companies being exposed to the key long-term growth drivers, such as electric vehicles and renewable energy, can be viewed quite positively as well, according to him.

From this standpoint, Wong reiterated his consistent preference for U.S. equities, recommending investors to avoid betting on stocks in emerging markets that are still facing difficulties recovering from the pandemic.

The senior investment strategist was particularly skeptical about investment sentiment in mainland China.

“China is having a wave of negative sentiment at the moment, because of regulatory pressures on a variety of industries,” he said.

The asset management company also sided with the U.S. Federal Reserve's claim that the inflation pressure is just temporary.

“After the economic recession, the demand recovers first and the supply comes next, due to the need for time to reorganize facilities,” AllianceBernstein's senior portfolio manager Yoo Jae-heung said. “Because the consumption of products has been brisk, the manufacturing sector has recovered faster than the service sector, resulting in a certain level of bottleneck situation.”

Regarding the global trend of pursuing investments considering the environmental, social and corporate governance (ESG) principles, the institutional investor warned about possible “greenwashing.” This is the term which refers to an attempt to exaggerate a company's efforts to improve sustainability.

Wong advised investors to pay keen attention to which department provides a company's ESG-related information. He said the offices of high-ranking executives provide more reliable information than marketing departments.