Finance Eyes

 

The Korea Exchange held an investors’ conference call in Hong Kong last week. There, Adrian Mowat, chief emerging market and Asian equity strategist at JP Morgan, said that the Korean stock market is currently undervalued.

“Korean enterprises’ earnings per share are likely to be improved, and Korea’s low interest rate is expected to be a boon for the housing and automobile markets,” he said, continuing, “At the same time, leading corporations are continuing to reshape their corporate governance structures with more and more of them adopting shareholder-friendly measures such as share buyback.”

He added that Korea’s manufacturing sectors, including shipbuilding, chemicals and automobiles, are going through hard times between those of China and Japan, causing Korean enterprises in these industries to concentrate on vertical integration and downsizing. He said that this matter should be dealt with in view of long-term shareholder interests.

In the meantime, he predicted that the Fed is likely to raise interest rates at the FOMC meeting scheduled for next month. “Still, the interest rate hike will allow investors to regain confidence rather than leading money to outflow, and then they could seek more high-risk assets, limiting the possibility of a collection of the U.S. dollar,” he mentioned, adding, “In addition, the ongoing decline in China’s imports, which started a year ago, is expected to slow down with time.”

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