Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>FSC Chairman Kim Joo-hyun mentioned that too many companies in Korea are trading below book value and the FSC plans to implement changes to improve upon this issue. </li>
<li>According to Korea Exchange, 1,111 companies out of total listed in KOSPI and KOSDAQ in Korea (2,538) are trading at below 1x book value (PBR) (liquidation value). </li>
<li>According to the Capital Group, about 39% of companies in the TOPIX trade below book value, compared to just 5% for companies in the S&amp;P 500 Index. </li>
</ul>


FSC Chairman Kim Joo-hyun mentioned that too many companies in Korea are trading below book value and the FSC plans to implement changes to improve upon this issue. 
According to Korea Exchange, 1,111 companies out of total listed in KOSPI and KOSDAQ in Korea (2,538) are trading at below 1x book value (PBR) (liquidation value). 
According to the Capital Group, about 39% of companies in the TOPIX trade below book value, compared to just 5% for companies in the S&amp;P 500 Index. 


44% of Korean Stocks Are Trading Below Book Value - FSC Wants to Improve This (Following Japan)

<ul>
<li>At the end of September 2022, Korean stocks accounted for 13.6% of total assets of the NPS whose target for domestic stock exposure is 15.9% by end of this year. </li>
<li>In recent months, NPS has been net increasing purchases of companies including Naver, Celltrion, POSCO Chemical, Samsung Life Insurance, and Krafton. </li>
<li>Although the allowable range for SAA by NPS is ±3%p, there is some leeway for NPS to add to the domestic equities given that they were much lower than target. </li>
</ul>


At the end of September 2022, Korean stocks accounted for 13.6% of total assets of the NPS whose target for domestic stock exposure is 15.9% by end of this year. 
In recent months, NPS has been net increasing purchases of companies including Naver, Celltrion, POSCO Chemical, Samsung Life Insurance, and Krafton. 
Although the allowable range for SAA by NPS is ±3%p, there is some leeway for NPS to add to the domestic equities given that they were much lower than target. 


NPS Could Raise Investments in Korean Stocks in December 2022

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*Reversing Course Again: On April 3, 2020, the European Insurance and Occupational Pensions Authority (EIOPA) - the European Union’s financial regulatory body which replaced the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) – in the context of the corona virus, released a statement urging insurers to “temporarily suspend all discretionary dividend distributions and share buybacks aimed at remunerating shareholders” in order to preserve capital. In an odd reversal of course, EIOPA has updated its commentary surrounding European insurance capital management; and  *Asia-Pacific Insurers Still At Risk: Asia-Pacific insurance counterparts previously acted in capital solidarity with their Western peer during COVID-19. Many Asia-Pacific insurers purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to continue to be outsized and challenge capital their ratios. We are hopeful that the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea – don’t behave as desperately as their European counterparts have.

*Reversing Course Again: On April 3, 2020, the European Insurance and Occupational Pensions Authority (EIOPA) - the European Union’s financial regulatory body which replaced the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) – in the context of the corona virus, released a statement urging insurers to “temporarily suspend all discretionary dividend distributions and share buybacks aimed at remunerating shareholders” in order to preserve capital. In an odd reversal of course, EIOPA has updated its commentary surrounding European insurance capital management; and  *Asia-Pacific Insurers Still At Risk: Asia-Pacific insurance counterparts previously acted in capital solidarity with their Western peer during COVID-19. Many Asia-Pacific insurers purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to continue to be outsized and challenge capital their ratios. We are hopeful that the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea – don’t behave as desperately as their European counterparts have. 

October continued to see sector rotation in Korea with growth-oriented stocks under performing value-oriented stocks. The following were the top 10 issues related to Korean stock market, economy, and politics in October 2020.1) DEATH OF SAMSUNG GROUP CHAIRMAN LEE KUN HEE2) BIG HIT ENTERTAINMENT IPO3) REGULATORS GOING AFTER THE OPTIMUS FUNDS 4) MAJOR POTENTIAL CHANGE IN TAX LAWS THAT COULD RESULT IN BIG SELLING BY RETAIL IN DECEMBER 5) LG CHEM APPROVES TO SEPARATE THE BATTERY BUSINESS 6) STRATEGIC PARTNERSHIP BETWEEN NAVER &amp; THE CJ GROUP7) SK TELECOM SPINS OFF MOBILITY BUSINESS &amp; PARTNERS WITH UBER 8) PAYPAL ALLOWS TRANSACTIONS IN CRYPTOS 9) INCREASED NEWS FLOW ABOUT THE NEED TO RECOUNT VOTES OF 4.15 (15 April 2020) PARLIAMENTARY ELECTION 10) SOCAR BECOMES THE NEXT UNICORN

October continued to see sector rotation in Korea with growth-oriented stocks under performing value-oriented stocks. The following were the top 10 issues related to Korean stock market, economy, and politics in October 2020.1) DEATH OF SAMSUNG GROUP CHAIRMAN LEE KUN HEE2) BIG HIT ENTERTAINMENT IPO3) REGULATORS GOING AFTER THE OPTIMUS FUNDS 4) MAJOR POTENTIAL CHANGE IN TAX LAWS THAT COULD RESULT IN BIG SELLING BY RETAIL IN DECEMBER 5) LG CHEM APPROVES TO SEPARATE THE BATTERY BUSINESS 6) STRATEGIC PARTNERSHIP BETWEEN NAVER &amp; THE CJ GROUP7) SK TELECOM SPINS OFF MOBILITY BUSINESS &amp; PARTNERS WITH UBER 8) PAYPAL ALLOWS TRANSACTIONS IN CRYPTOS 9) INCREASED NEWS FLOW ABOUT THE NEED TO RECOUNT VOTES OF 4.15 (15 April 2020) PARLIAMENTARY ELECTION 10) SOCAR BECOMES THE NEXT UNICORN 

Korea Stock Market Monthly Recap #53 (October 2020)

South Korea

Samsung Life Insurance Co., Ltd. provides insurance services. The Company offers life and health insurance services. Samsung Life Insurance serves customers in South Korea.

Price Gauge
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Samsung Life Insurance (032830 KS)

44% of Korean Stocks Are Trading Below Book Value - FSC Wants to Improve This (Following Japan)

A 44% of Korean stocks are trading below book value. FSC wants to improve this, following Japan's "name and shame" policy.

Douglas Kim

NPS Could Raise Investments in Korean Stocks in December 2022

At the end of September 2022, Korean stocks accounted for 13.6% of total assets of the NPS whose target for domestic stock exposure is 15.9% by end...

Douglas Kim

Asian Insurers – Mea, Mea EIOPA

ASIA INSURERS: On April 3, 2020, EIOPA temporarily suspended capital management activities," but just reversed course. Many Asia-Pacific insurers...

Thomas J. Monaco

Korea Stock Market Monthly Recap #53 (October 2020)

In this insight, it provides the summary of the top 10 issues related to Korean stock market, economy, and politics in October 2020.

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

44% of Korean Stocks Are Trading Below Book Value - FSC Wants to Improve This (Following Japan)

A 44% of Korean stocks are trading below book value. FSC wants to improve this, following Japan's "name and shame" policy.

Douglas Kim

NPS Could Raise Investments in Korean Stocks in December 2022

At the end of September 2022, Korean stocks accounted for 13.6% of total assets of the NPS whose target for domestic stock exposure is 15.9% by end...

Douglas Kim

Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

Asian Insurers – Mea, Mea EIOPA

ASIA INSURERS: On April 3, 2020, EIOPA temporarily suspended capital management activities," but just reversed course. Many Asia-Pacific insurers...

Thomas J. Monaco

Korea Stock Market Monthly Recap #53 (October 2020)

In this insight, it provides the summary of the top 10 issues related to Korean stock market, economy, and politics in October 2020.

Douglas Kim