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Business Insider
2 days ago
- Business
- Business Insider
Global Investors Are Buying Korean Stocks Again – Is It Time for You to Act?
After years of underperformance, South Korea's stock market is back in the spotlight. Global investment firms, such as Aberdeen Investments, Franklin Templeton, and Pictet Wealth Management, are increasing their exposure to Korean stocks as the new government promotes stronger shareholder rights, enhanced corporate governance, and improved capital returns. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter President Lee Jae-myung's administration has made shareholder reform a top priority. Investors are now watching closely to see if these changes can narrow the long-standing 'Korea discount' – the tendency for Korean companies to trade at lower valuations compared to their global peers due to weak minority protections and opaque corporate practices. Foreign Investors Are Coming Back The Composite Stock Price Index, KOSPI in short, entered a bull market on Lee's first day in office. According to Korea Exchange data, dividend payouts from Kospi-listed firms rose 12% in 2024 to 44 trillion won, while share buybacks more than doubled to 18.7 trillion won. Some companies are also revising capital plans. Hanwha Aerospace Co., for example, reduced a planned share sale after investor concerns over dilution. What's Changing? Reform efforts focus on giving shareholders more influence. Proposed legislation would: Expand board duties to prioritize shareholders, strengthen audit committee nominations, and support electronic voting and virtual shareholder meetings. These steps are part of the 'Corporate Value-Up' program, modeled after Japan's governance reforms. Around 160 companies have submitted Value-Up plans, though many remain vague. Global investors hope future versions will be more detailed and enforceable. Global Confidence Rises Aberdeen's Asia ex-Japan fund turned overweight on Korea in May. JPMorgan (JPM) Asset Management and Franklin Templeton have also increased their holdings, citing low valuations and early signs of real change. For retail investors, this could be a signal to take a closer look at key Korean stocks, especially those showing improved governance and stronger capital return policies. Notable Stocks to Watch The Outlook Challenges remain. Inheritance and dividend tax reform is still under debate, and Korea faces trade risks and economic headwinds. However, with strong political backing and rising global interest, investors are watching closely. As most companies (besides Samsung and Hyundai), do not appear on Wall Street. We've created an alternative general chart to showcase the stocks mentioned in the article:
Business Times
2 days ago
- Business
- Business Times
Global funds bet on South Korean stocks' big break on reform tailwinds
After years of frustration with South Korea's underperforming stock market, investors are growing more optimistic that the new president's push for shareholder-friendly policies will finally deliver stronger returns. Global money managers, including Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton, have recently added positions or upgraded their outlook on local stocks. They are encouraged by newly-elected Lee Jae-myung's vows to boost corporate governance and nearly double the market's return, after months of political chaos in the nation triggered by his predecessor's short-lived martial law imposition. Foreigners are returning to the stock market, helping to push the benchmark Kospi Index into a bull market on Lee's first day in office. The early euphoria suggests investors are confident that Lee will accelerate efforts to boost shareholder returns – reminiscent of a similar drive that unleashed a stock rally in Japan – and succeed in the passage of a commercial law revision aimed at improving corporate governance. 'We are starting to see early signs of change,' said Pruksa Iamthongthong, deputy head of Apac equities at Aberdeen Investments, whose US$1.2 billion Asian ex-Japan fund turned overweight on South Korean stocks in May. 'We believe that such a collective effort on the part of the government and domestic companies will go a long way in boosting trust in Korea's capital markets and creating a culture of a greater heed to shareholder value.' Agitated investors South Korea's economy is dominated by family-controlled conglomerates, known as chaebols, which have come under criticism for failing to protect the rights of minority shareholders. That's resulted in investors often pricing local stocks below their book value and lower than overseas rivals, a phenomenon known as the 'Korea discount'. Shareholders are getting increasingly agitated, with activism campaigns targeting companies rising by seven-fold between 2020 and 2024, according to Bloomberg Intelligence. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'That link between what a company earns and what minority shareholders get back was broken,' said Jon Jhun, managing director at Management HK Advisors in Hong Kong. It's 'about to be fixed by the Democratic Party and their legislation'. One of Lee's early priorities is to root out rubber-stamping directors by revising the commercial code to broaden board fiduciary duty to shareholders – and not just to the company itself. The ruling party's officials are proposing new revisions, which include enhancing the nomination process for audit committee members and adopting electronic voting systems. Such revisions largely target chaebol conglomerates and their founding families, who wield outsized influence in the economy and at listed companies' management and boards. The new political leadership will likely look to further galvanise a wave of changes that were put in motion more than a year ago, in a programme called the 'Corporate Value-up'. Modelled after Japan's 'name and shame' initiatives, the programme urges companies to self-start a range of measures to boost shareholder returns. A total of 160 companies have unveiled Value-up plans, though many lacked details, said John Cho, South Korea equity portfolio manager at JPMorgan Asset Management. 'We anticipate that future iterations of medium-term planning should lead to more refined Value Up plans,' Cho said. 'Korea is only in its second year of the Value Up plan, compared to Japan's decade-long governance journey.' Signs are emerging that companies are taking proactive measures. Kospi members' total dividend payouts rose 12 per cent in 2024 to 44 trillion won (S$42 billion), according to Korea Exchange's data. Share buybacks more than doubled to 18.7 trillion won in 2024. 'These chaebols are actually changing their plans due to the pressure from the government and from the market,' said Yiping Liao, a portfolio manager at Franklin Templeton Emerging Markets Equity, which has been selectively adding South Korean stocks before the election. Earlier this year, arms maker Hanwha Aerospace also cut the size of a share offering after backlash from investors who were concerned about value dilution. Even with the legislature largely in his corner, Lee is not taking on his agenda without challenges. Some investors and activists have called for revising taxes on inheritance and dividends to help lift stocks, but that would require broader public support. The new president will also have to juggle a host of issues that darken the country's outlook, such as the prospect of higher tariffs from the US, an economy in contraction, and a deep-seated polarisation. Still, a corporate culture shift is underway, said Jonathan Pines, lead portfolio manager and head of Asia ex-Japan at Federated Hermes. 'We are significantly overweight Korean equities because of low valuations, and in the hope that the landscape continues to improve,' he said. BLOOMBERG
Bloomberg
3 days ago
- Business
- Bloomberg
Global Funds Bet on Korean Stocks' Big Break on Reform Tailwinds
After years of frustration with South Korea's underperforming stock market, investors are growing more optimistic that the new president's push for shareholder-friendly policies will finally deliver stronger returns. Global money managers, including Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton, have recently added positions or upgraded their outlook on local stocks. They are encouraged by newly-elected Lee Jae-myung's vows to boost corporate governance and nearly double the market's return, after months of political chaos in the nation triggered by his predecessor's short-lived martial law imposition.
Yahoo
28-05-2025
- Business
- Yahoo
Chinese Stock Market in Limbo as Investors Lack Conviction
(Bloomberg) -- Chinese stocks have been notably calm during the recent bout of global market volatility, as investors opt to stay on the sidelines until there is clarity on tariffs and domestic stimulus. NY Wins Order Against US Funding Freeze in Congestion Fight The CSI 300 Index has moved less than 0.5% in half of the sessions over the past month. Turnover has drifted lower as traders avoided building leveraged positions. With the broader stock market lacking direction, investors are flocking to either safer fixed-income products or riskier small-cap stocks to boost returns. 'Market direction is uncertain because there's a lack of good news, though there's also no major negative catalyst' after the US-China tariff truce, said Xin-Yao Ng, investment director at Aberdeen Investments. 'I find it hard to grasp the direction on beta currently, but there are still some good stock picking opportunities.' While the market's stability may be a sign of resilience, it more likely reflects waning enthusiasm for Chinese stocks as economic headwinds build. US tariffs on Chinese goods can shoot up again once the 90-day negotiation window ends in August. Beijing has taken a piecemeal approach to stimulus this year, disappointing investors who had been anticipating stronger policy support for the economy. Here are some indicators that show cooling trading sentiment. Price swings have eased to levels last seen before the People's Bank of China reignited animal spirits with its stimulus blitz in September. The CSI 300 Index's 30-day volatility is hovering at around eight points, the lowest since July 2024. For the market to break such tranquility, traders say Beijing needs to implement deeper structural reforms and make breakthroughs on trade talks. 'I would focus on income growth and employment, without that the consumption story cannot return,' said Sat Duhra, a portfolio manager at Janus Henderson Investors, adding that there is a limit on the impact of stimulus. 'A resolution to the trade talks will drive more positive sentiment but it will be short-lived, and that doesn't address the structural challenges facing China.' Leveraged equity positions in China have stagnated since April. Outstanding margin debt balances on mainland exchanges are hovering around 1.8 trillion yuan ($250 billion), down nearly 8% from a March high. While equity benchmarks initially rallied following a temporary US-China tariff truce, subsequent losses have pared the CSI 300's gain for the month to under 2%. Part of the reason for the listless trading can be subdued activity from the so-called 'National Team' funds after record purchases last month. The squad has been largely dormant since late April, with inflows into a group of exchange-traded funds known to be favored by the team slowing to a trickle, or even turning to outflows, according to data compiled by Bloomberg. Meanwhile, aggregate flows into all equity-focused ETFs in China have been negative for five straight weeks. While enthusiasm toward stocks has cooled, fixed-income ETFs have become all the rage. The turnover across a basket of 30 such products hit a record 90 billion yuan this month, accounting for an unprecedented 8.2% of all trading value in Shanghai and Shenzhen. The last time the ratio reached 8% was in August 2024, when stocks were still in the doldrums. These risk-adverse products have consistently ranked as the most actively-traded securities in Shanghai and Shenzhen over the past two weeks, according to Bloomberg-compiled data. A lack of clear direction has pushed some investors into more riskier corners of the market. Trading in the smallcap CSI 2000 Index accounted for more than a third of the total turnover on the mainland on Tuesday. The CSI 2000 gauge has gained nearly 9% this year through Tuesday, compared to the CSI 300's 2.4% drop. The surge in interest toward volatile smallcaps suggests a lack of sustainable themes to chase in the stock market. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Why Apple Still Hasn't Cracked AI Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol ©2025 Bloomberg L.P. Sign in to access your portfolio
Economic Times
28-05-2025
- Business
- Economic Times
India bonds are a buy for Citi on diverging rates policy with US
Citigroup anticipates a continued rally in Indian bonds, driven by deeper interest rate cuts by the Reserve Bank of India, potentially reaching 5%. This diverges from the US Federal Reserve's stance, weakening the traditional link between Indian bonds and US Treasuries. Aberdeen Investments echoes this view, predicting further rate cuts amid easing inflation and potentially lower oil prices. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The rally in Indian bonds is set to extend as the nation embarks on deeper interest-rate cuts, diverging from the US, according to Citigroup Reserve Bank of India may cut interest rates by 100 basis points to a three-year low of 5% after two consecutive reductions this year, said Rohit Garg, head of foreign-exchange and rates strategy Asia ex-Japan. Aberdeen Investments sees a similar in contrast to the Federal Reserve's pause on rates and outlook that it's not in a hurry to slash further — and the divergence means investors' outlook for Indian bonds in terms of their spread over US Treasuries is changing, Garg said. For years, local bonds have largely moved in tandem with swings in Treasuries, with the returns over the world's safest debt serving as a key barometer for overseas link seems to be weakening now, as Indian bonds rallied amid a selloff in their US counterparts, sending the yield gap to a 20-year low.'We are in a bit of a structural change wherein the need for us to actually see Indian bonds as a spread to US Treasuries should be declining because monetary policies are diverging,' said yields on 10-year bond has declined by more than 30 basis points since the start of the fiscal year on April 1. In contrast, that on similar-maturity US note has climbed by 27 points as President Donald Trump's tariffs fueled inflation divergence is likely to sustain, 'which means that we should be looking at Indian bonds from the context of where monetary policy in India is, where can it go,' said Garg. He expects the 10-year yield to fall to 6% in the next three months, from 6.25% on Investments is also predicting 100 basis points of rate cuts in the current cycle on easing inflation. That may push yields down to 5.5% 'should it coincide with faltering global growth and lower oil prices,' said Kenneth Akintewe, head of Asia sovereign debt at didn't give a specific time frame for his rate call, but by one comparison, economists surveyed by Bloomberg see India's repurchase rate falling to an average of 5.40% by March 2026. Citi 's analysts including Garg had predicted an end to peak dollar strength against Asian currencies in early March. Since then, the dollar has weakened and 'all Asian central banks are looking at monetary policies that are a lot more dominated by their own domestic needs as compared to trying to preserve external stability,' Singapore-based Garg said.
