Long-term Outlook

 

“We will keep our investment in Korea even if the North conducts a nuclear test. We look upon Korea’s automobile and IT stocks as promising.”

Amid renewed foreign interest for “Buy Korea,” the world biggest asset management firm BlackRock expressed their positive view on the Korean stock market, raising the hope for an additional hike.

Matthew Anestis, a BlackRock portfolio strategist, said at a press conference held at the Conrad Hotel in Yeuido last week, “We are not affected by short-term risk, since we pursue long term investments focusing on individual businesses and themes.” The statement conveys the firm’s undaunted stance, but also is noteworthy in that it accepts the North’s nuclear test as a short-term risk, differentiating itself from other foreigners’ views.

The strategist showed optimism in his outlook on Korean Stock Market. He said, “The Korean GDP is largely occupied by its exports. Recently, the U.S. and Europe are seeing economic recovery, so if the global market revives, it will shed a positive effect on the Korean Market, which is dominated by many export companies.” He further analyzed that “There has been the prospect that China’s economy will slow down, but if its economy, through re-balancing, shifts its central axis towards domestic demand and consumption, Korea can garner its positive effects.” He also assessed that Korea distinguishes itself from other emerging markets and said, “Korea has a healthy debt ratio to GDP ratio and its foreign exchange reserve is rising, making itself relatively free from the effects of tapering.”

He cited the rise in Americans’ demand for cars as the ground for looking at automobiles as promising among Korean stocks. He said, “Americans own the most worn out cars in history. More and more Americans will upgrade their cars, proving a boon to Korean automobile export companies.” Then he added, “Korea’s IT industry will also be hailed as a bright investment opportunity on the back of rising mobile and Internet markets.”

Among global stock investment areas, he counted Japan and Europe as propitious. He observed that “With Japan’s wage and inflation on the rise, household assets will be rearranged. Currently, the stock portion against financial assets is extremely small in Japan. With the continued inflation and low interest trend, assets in savings account may be shifted to stocks. Japanese policies also show positive signs, since their public pension tends to decease its bond ratio while increasing the stock portion.” He also showed optimism on European stocks by saying, “Europe will be an attractive investment target, since Southern Europe, after going through a financial crisis, seems to be resolving its current account deficits while credibility on European banks is recuperating.”

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