Mirae Asset Global Investments, an Asian asset management company, believes Korean equities offer favourable earnings and remain cheap compared to other Asian countries.
Sung Woo Kim, fund manager of the Mirae Asset Korea Equity Sicav, says: “We are bullish on Korean companies as recent favourable earnings reflect their bigger global market shares, based on stronger competitiveness, rather than overall economic recovery. Furthermore, the valuation of Korean companies remains relatively cheap compared to other Asian countries and also to their respective industry peers.”
The Mirae Asset Korea Equity Sicav has returned 82.5 per cent compared to 41.99 per cent returned by its benchmark, the Kospi Index since inception in July 2008. The fund has total assets under management of USD115m.
Kim says: “I believe that the growth of the developing countries is likely to continue to outpace the growth of the developed countries for a while. The US and Europe market will recover gradually, but the growth of the emerging countries including China, India and Brazil will drive the world economy with the high saving rate, domestic investment demand and growth potential. Korean companies have captured business opportunities in those countries, as they have already experienced a similar developing period two decades ago, and have been expanding their market share successfully. We predict that the earning growth of the Korean manufacturing industry along with the growth of the emerging countries might be even higher than the average growth of Korean economy.”
Mirae Asset believes that Korean chemicals companies have strengthened their international competitiveness, based on favourable cash-flow positions and sound financial structures, and have made a series of successful investments in a certain number of growth industries. It is therefore bullish on the chemicals sector, despite some industry concerns that an expansion of the Middle East’s petrochemical supply could have a negative effect in terms of supply and demand. It believes that the long term cycle will be up turn, beginning in 2010.
The Mirae Asset Korea Equity Sicav aims to achieve long-term capital growth by investing mainly in equities and equity-related securities of companies domiciled in or exercising a large portion of their economic activity in the developed and emerging countries of the Asia Pacific region (ex-Japan). On a sector basis, the fund favours materials, information technology and industrials. The major three holdings are LG chemical, Samsung Electronics, Hyundai heavy industry.