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Korea Herald
6 days ago
- Business
- Korea Herald
Morningstar says Korean stocks are emerging markets' best bet for decade
A fund manager at Morningstar Wealth is selling Chinese and Japanese equities to increase exposure to South Korea, which he's betting on to provide the best returns in both emerging and Asian markets over the next decade. Korea's key draws are technology stocks tied to the artificial intelligence boom and a newfound political will for corporate reforms, according to Mark Preskett, a London-based senior portfolio manager at the firm. He said he's betting on annual returns from Korean stocks of 11 percent-12 percent in dollar terms over the next 10 years. Preskett is unfazed by US President Donald Trump's announcement Monday of a 25 percent tariff on Korean imports, saying that his base case is for 'some kind of agreement to be signed by the two countries in the coming weeks.' He said that the lack of any escalation on existing tariffs on autos, and the exemption of electronics and pharmaceuticals, were also positives for his outlook on Korea. The benchmark Kospi index has climbed more than 30 percent this year, making it one of the world's top performers in 2025. Global funds poured about $3 billion into Korean equities in May and June around the election of President Lee Jae Myung, who has intensified efforts to improve corporate governance standards and raise equity valuations. 'Korea stands out at the top in terms of expected returns,' Preskett said in an interview in London. 'We see this as the beginning of a revaluation story.' The fund manager said he's encouraged by the government's drive to codify corporate governance reform with its 'Value-Up' program, while legal changes approved by parliament last week will help alleviate longstanding concerns about minority shareholder rights and the dominance of family-run chaebols. The more stable government since Lee's election, along with concerted steps to reduce the 'Korea discount' of the nation's stocks versus emerging-market peers, are making the market more attractive, particularly relative to China, Preskett said. Companies in Korea have a weighting of less than 11 percent in the benchmark MSCI Emerging-Market Index, compared with China's 26 percent. 'We see Korea has some of the same attractiveness from a valuation perspective, but the fundamentals are a little stronger,' he said. 'You don't have this overhang of the property sector, you don't have the sort of question marks around shareholder governance.' Among specific stocks, Preskett is positive on SK Hynix Inc. and Samsung Electronics Co. as makers of high-bandwidth memory chips that are crucial for AI. He also says they're undervalued, even with Samsung up by about 14 percent this year, and SK Hynix up 62 percent. Corporate reforms Risks remain for the market, even beyond tariffs, especially in terms of getting companies on board with the government's plans. 'Controlling shareholders may resist deeper reforms, particularly around capital management, and continue to suppress dividends under the guise of conservatism or future M&A,' said Jonathan Pines, head of Asia ex-Japan at Federated Hermes. Recent market volatility is still fresh in investor's minds as well after the political turmoil around the previous president's declaration of martial law in December. With a further drag from Trump's tariffs, the Kospi slumped about 13% over two weeks into April. Still, Preskett sees the Korea story as a strong long-term investment theme, noting that the new government has pledged fiscal reforms that should also help the consumer and banking sectors. 'For us, it is the start of a journey,' he said. 'We feel that it's tip of the iceberg in terms of flows and potential revaluation.' (Bloomberg)
Korea Herald
6 days ago
- Business
- Korea Herald
Morningstar says Korean stocks are emerging market's best bet for decade
A fund manager at Morningstar Wealth is selling Chinese and Japanese equities to increase exposure to South Korea, which he's betting on to provide the best returns in both emerging and Asian markets over the next decade. Korea's key draws are technology stocks tied to the artificial intelligence boom and a newfound political will for corporate reforms, according to Mark Preskett, a London-based senior portfolio manager at the firm. He said he's betting on annual returns from Korean stocks of 11 percent-12 percent in dollar terms over the next 10 years. Preskett is unfazed by US President Donald Trump's announcement Monday of a 25 percent tariff on Korean imports, saying that his base case is for 'some kind of agreement to be signed by the two countries in the coming weeks.' He said that the lack of any escalation on existing tariffs on autos, and the exemption of electronics and pharmaceuticals, were also positives for his outlook on Korea. The benchmark Kospi index has climbed more than 30 percent this year, making it one of the world's top performers in 2025. Global funds poured about $3 billion into Korean equities in May and June around the election of President Lee Jae Myung, who has intensified efforts to improve corporate governance standards and raise equity valuations. 'Korea stands out at the top in terms of expected returns,' Preskett said in an interview in London. 'We see this as the beginning of a revaluation story.' The fund manager said he's encouraged by the government's drive to codify corporate governance reform with its 'Value-Up' program, while legal changes approved by parliament last week will help alleviate longstanding concerns about minority shareholder rights and the dominance of family-run chaebols. The more stable government since Lee's election, along with concerted steps to reduce the 'Korea discount' of the nation's stocks versus emerging-market peers, are making the market more attractive, particularly relative to China, Preskett said. Companies in Korea have a weighting of less than 11 percent in the benchmark MSCI Emerging-Market Index, compared with China's 26 percent. 'We see Korea has some of the same attractiveness from a valuation perspective, but the fundamentals are a little stronger,' he said. 'You don't have this overhang of the property sector, you don't have the sort of question marks around shareholder governance.' Among specific stocks, Preskett is positive on SK Hynix Inc. and Samsung Electronics Co. as makers of high-bandwidth memory chips that are crucial for AI. He also says they're undervalued, even with Samsung up by about 14 percent this year, and SK Hynix up 62 percent. Corporate reforms Risks remain for the market, even beyond tariffs, especially in terms of getting companies on board with the government's plans. 'Controlling shareholders may resist deeper reforms, particularly around capital management, and continue to suppress dividends under the guise of conservatism or future M&A,' said Jonathan Pines, head of Asia ex-Japan at Federated Hermes. Recent market volatility is still fresh in investor's minds as well after the political turmoil around the previous president's declaration of martial law in December. With a further drag from Trump's tariffs, the Kospi slumped about 13% over two weeks into April. Still, Preskett sees the Korea story as a strong long-term investment theme, noting that the new government has pledged fiscal reforms that should also help the consumer and banking sectors. 'For us, it is the start of a journey,' he said. 'We feel that it's tip of the iceberg in terms of flows and potential revaluation.' (Bloomberg)
Mint
08-07-2025
- Business
- Mint
Samsung Q2 results 2025: Operating profit falls 56%, lowest since 2023 on chip business crisis
Samsung Electronics reported its first profit decline since 2023, highlighting its growing struggles with market share in the AI-driven era. In the June quarter, the company's operating profit dropped by a sharper-than-expected 56 per cent, largely due to inventory write downs triggered by U.S. export restrictions on AI chips destined for China. Samsung posted a preliminary operating profit of 4.6 trillion won ($3.3 billion) for the June quarter, marking its lowest since 2023 and falling short of analysts' expectations. Revenue remained steady at 74 trillion won. A complete financial report, including net income and a breakdown by divisions, will be released later this month. These underwhelming earnings reveal how South Korea's tech giant has lost ground in the AI memory chip space to SK Hynix Inc., particularly amid the surge in demand after ChatGPT's rise. SK Hynix and Micron Technology Inc. have taken the lead in supplying advanced high-bandwidth memory chips used alongside Nvidia's AI processors. Meanwhile, Samsung's efforts to revive its loss-making chip foundry business are being hampered by ongoing U.S. restrictions on tech exports to China. Samsung reported a decline in profit after its foundry division, which partially depends on demand from China, incurred a one-time inventory charge due to unsold AI chips. The company also noted a drop in utilization rates, addressing the weaker-than-expected results in a rare statement. However, Samsung expects operating losses in its contract chipmaking segment to shrink in the second half of the year as demand slowly recovers. Despite prevailing concerns, shares of Samsung Electronics edged up by 0.4%, compared to a 1.5 per cent rise in the benchmark KOSPI as of 0030 GMT. The company announced plans to repurchase shares worth 3.9 trillion won ($2.85 billion), as part of a 10 trillion won buyback program unveiled in November. The company plans to release detailed results including a breakdown of earnings for each of its businesses on July 31. (With inputs from agencies) Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
Yahoo
30-01-2025
- Business
- Yahoo
Asian Equities Fall as Samsung, SK Hynix Weigh: Markets Wrap
(Bloomberg) -- Asian equities fell Friday, pressured by technology companies. US futures climbed after robust results from Apple Inc. Manhattan's Morning Commute Time Drops With New Congestion Toll Trump Paves the Way to Deputize Local Police on Immigration Housing Aid Uncertain After Trump's Spending Freeze Memo Trump's Federal Funding Pause Threatens State Financials How the 2025 Catholic Jubilee Is Reshaping Rome A gauge of Asian shares fell after two daily advances, and despite gains for Australian equities. Markets in mainland China, Hong Kong and Taiwan remain closed for the Lunar New Year holiday. SK Hynix Inc. and Samsung Electronics Co. fell, weighing on Korea's Kospi. Futures for the S&P 500 and Nasdaq 100 rose Friday after the two underlying benchmarks each rose 0.5% Thursday. Gains for US contracts were helped along by a post-market rally for Apple after the iPhone maker showed revenues exceeding estimates. Earnings for mega-cap tech companies face heightened scrutiny given the heavy selling in stocks associated with artificial intelligence earlier this month. Nvidia shares rose Thursday but remained on track for the worst week since September. 'This bull market is still 'breathing,' and we should expect more stock participation in the months ahead if the economy cooperates and rates quiet down,' said Callie Cox at Ritholtz Wealth Management. It's not that the AI story is 'doomed,' but 'there are so many opportunities in unloved sectors that have been ignored for so long.' Shares of SK Hynix, a key supplier to Nvidia Corp., tumbled as the South Korean stock market resumed trading Friday after holidays during which Chinese startup DeepSeek shocked the AI world. Samsung Electronics stock dropped after its pivotal chip division reported a smaller-than-expected profit. In the foreign exchange market, the currencies of Mexico and Canada slumped on Thursday after President Donald Trump said he would follow through on his threat to impose 25% tariffs on imports from both countries as early as Saturday. Trump cited the flow of fentanyl and large trade deficits as among the reasons for the decision. Trump also reiterated possible levies on China. Elsewhere in currencies, the yen held its advance from the prior session to trade around 154 per dollar in the wake of comments from Bank of Japan Deputy Governor Ryozo Himino reaffirmed views that the central bank will keep raising rates this year. The euro was steady after declining against the dollar while German bonds maintain gains after the European Central Bank lowered interest rates as expected. Meanwhile, Treasuries were steady after ending Thursday's session little changed. A gauge of the dollar rose for a fifth day. Attention will later shift to the Fed's favored inflation gauge, the personal consumption expenditures index, due later Friday. It's expected to show a small acceleration in price hikes by increasing 2.6% from a year earlier, up from 2.4% in the previous month, according to the median forecast of economists surveyed by Bloomberg. Gold edged higher after touching a record high to trade around $2,797 per ounce Friday. Oil prices also gained, leaving West Texas Intermediate, the US benchmark, at around $73 per barrel. PCE Index Monthly US household spending figures on Friday will likely point to momentum heading into 2025. Economists also expect the personal income and spending report to show a slight pickup in the personal consumption expenditures index from a month earlier. 'Friday's PCE is likely to show that inflation is still elevated and above the Fed's target, and it comes at a time when markets are hyper jittery about a trifecta of other issues, including big tech, AI and Federal Reserve uncertainty,' said Carol Schleif at BMO Private Wealth. The US economy expanded at a solid pace at the end of 2024, despite drags from a strike at Boeing Co. and much leaner inventory investment. Consumer spending, which comprises the largest share of economic activity, advanced at a 4.2% pace — the first time since late 2021 that outlays have exceeded 3% in consecutive quarters. The acceleration was the biggest since early 2023 and was led by a pickup in motor vehicle sales. 'Overall, the economy is on firm footing heading into 2025, which should support risk assets given the strong linkage between economic growth and corporate profits,' said Josh Jamner at ClearBridge Investments. The Federal Open Market Committee on Wednesday left interest rates unchanged as expected — after cutting them at each of their three previous meetings since September — and indicated that stalled progress toward lower inflation warranted a patient approach. ''Remaining patient' and 'no rush' seem to be how the FOMC plans on operating into the middle of the year, with a bumpy path for inflation giving the Fed pause before reading too much into gains that could prove idiosyncratic,' said Marvin Loh and Hope Allard at State Street Global Markets. Key events this week: US personal income & spending, PCE inflation, employment cost index, Friday Some of the main moves in markets: Stocks S&P 500 futures rose 0.1% as of 9:26 a.m. Tokyo time Japan's Topix was little changed Australia's S&P/ASX 200 rose 0.8% Euro Stoxx 50 futures rose 1.1% Currencies The Bloomberg Dollar Spot Index rose 0.1% The euro was little changed at $1.0397 The Japanese yen was little changed at 154.22 per dollar The offshore yuan was little changed at 7.2887 per dollar Cryptocurrencies Bitcoin fell 0.3% to $104,775.65 Ether rose 0.3% to $3,254.45 Bonds The yield on 10-year Treasuries advanced one basis point to 4.53% Japan's 10-year yield advanced one basis point to 1.220% Australia's 10-year yield was little changed at 4.38% Commodities West Texas Intermediate crude rose 0.6% to $73.19 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation. 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Bloomberg
30-01-2025
- Business
- Bloomberg
Samsung's Chip Profit Misses on Costly AI Memory Catchup Race
Samsung Electronics Co. 's pivotal chip division reported a smaller-than-expected profit as the world's largest memory chipmaker fights to narrow the lead arch-rival SK Hynix Inc. has in the artificial intelligence arena. The Suwon-based company's semiconductor unit reported operating profit of 2.9 trillion won ($2.1 billion) for the December quarter, falling short of analysts' average projection for 4.78 trillion won. That compares with the 3.86 trillion won operating profit in the previous quarter. Its shares were down more than 3% on Friday.
