Following Goldman Sachs? Bet on South Korea ETFs
Goldman Sachs predicts that South Korea's equity markets offer the highest potential earnings growth in the Asia-Pacific region for 2024, driven by the recovery of its semiconductor sector after experiencing significant profit declines. The investment firm maintains an overweight position on South Korean stocks.
The Korea Discount
Despite being Asia's fourth-largest economy, South Korea's markets are often perceived as undervalued by analysts, leading to the so-called "Korea discount," as quoted on CNBC. This sentiment is reflected in the Kospi benchmark index's key metrics.
Exploring Investment Opportunities in Defense Stocks
Goldman Sachs identifies defense stocks within the South Korean market as particularly appealing. South Korea has a significant presence as a global weapons supplier, second only to China. The investment firm points out specific defense companies with strong profit growth expectations that offer an attractive hedge against geopolitical risks.
Potential Catalyst: Short-Selling Ban
South Korea's recent ban on short selling, effective until the end of June 2024, has the potential to be a catalyst for the market. Goldman Sachs highlights the historical performance of the Kospi following short-selling bans and suggests that such valuations can offer promising returns to investors in the next 12 months.
Steady GDP & Stellar Performance of Kospi
South Korea’s economy grew 0.6% sequentially in the September quarter of 2023, maintaining the same pace as that of the prior quarter and surpassing market expectations of 0.5% expansion, a preliminary reading showed. The Kospi has outperformed expectations, posting a gain of over 12% this year, establishing itself as one of the leading major stock markets in Asia, excluding Japan.
ETFs in Focus
Against this backdrop, below we highlight a few South Korea ETFs that could be appealing picks right now. These ETFs have been high momentum lately.
iShares MSCI South Korea ETF EWY – Up 13.4% Past Month
Franklin FTSE South Korea ETF FLKR – Up 13.6% Past Month
Matthews Korea Active ETF MKOR – Up 9.7% Past Month
Direxion MSCI Daily South Korea Bull 3X Shares KORU – Up 40.9% Past Month
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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iShares MSCI South Korea ETF (EWY): ETF Research Reports
Direxion Daily MSCI South Korea Bull 3x Shares (KORU): ETF Research Reports
Franklin FTSE South Korea ETF (FLKR): ETF Research Reports
Matthews Korea Active ETF (MKOR): ETF Research Reports
