Investors who bet on a smooth political transition following years of high level scandal in South Korea have been rewarded for their patience. The iShares MSCI South Korea (EWY 63,28 +1,10 +1,77%) is beating the market. It beat the MSCI Emerging Markets (EEM 40,84 +0,07 +0,17%) ETF and the BLDRS Asia 50 (ADRA 34,64 -0,08 -0,23%) ETF thanks to a combination of falling political risks and momentum drivers. Is it too late to get in?
Newly elected South Korean President Moon Jae-In is seen as a welcome mix of pro-growth economics and peace politics, with Moon willing to engage with their rabble rousing neighbors in the north. That beats austerity and a government that wants to disengage from North Korea. This is likely part of the reason why the Korean stock market rallied since the impeachment of Park Geun-Hye earlier this year and after Moon’s widely-expected election victory on May 9th.
Year-to-date the KOSPI is up nearly 22% in dollar terms, while the exchange-traded fund EWY is up 24.7%. Since Moon’s election victory, the KOSPI is up a little over 2% as investors took some money off the table since. Meanwhile, the Korean won continues to strengthen against the dollar, appreciating more than 7% year-to-date.
What do investors like about South Korea? Moon’s emergent focus appears to be economic growth and increasing jobs rather than simply resorting to redistributive policies. Although total unemployment is benign at 4%, youth unemployment is close to 12%, which is about four percentage points higher than it was last November. Despite Moon’s center-left campaign calls for raising taxes on the wealthy and raising the minimum wage, there is a bigger picture here that is keeping the market interested, says Vladimir Signorelli, head of Bretton Woods Research in New Jersey. He is optimistic on the South Korean ETF.
As for geopolitics, Moon is the right person to open dialogue with North Korea. As an ex-commando and human rights lawyer, he possesses an unimpeachable background to pursue a diplomatic shift toward engagement. Why The South Korea ETF Still Looks Good
Investors who bet on a smooth political transition following years of high level scandal in South Korea have been rewarded for their patience. The iShares MSCI South Korea (EWY 63,28 +1,10 +1,77%) is beating the market. It beat the MSCI Emerging Markets (EEM 40,84 +0,07 +0,17%) ETF and the BLDRS Asia 50 (ADRA 34,64 -0,08 -0,23%) ETF thanks to a combination of falling political risks and momentum drivers. Is it too late to get in?
Newly elected South Korean President Moon Jae-In is seen as a welcome mix of pro-growth economics and peace politics, with Moon willing to engage with their rabble rousing neighbors in the north. That beats austerity and a government that wants to disengage from North Korea. This is likely part of the reason why the Korean stock market rallied since the impeachment of Park Geun-Hye earlier this year and after Moon’s widely-expected election victory on May 9th.
Year-to-date the KOSPI is up nearly 22% in dollar terms, while the exchange-traded fund EWY is up 24.7%. Since Moon’s election victory, the KOSPI is up a little over 2% as investors took some money off the table since. Meanwhile, the Korean won continues to strengthen against the dollar, appreciating more than 7% year-to-date.
What do investors like about South Korea? Moon’s emergent focus appears to be economic growth and increasing jobs rather than simply resorting to redistributive policies. Although total unemployment is benign at 4%, youth unemployment is close to 12%, which is about four percentage points higher than it was last November. Despite Moon’s center-left campaign calls for raising taxes on the wealthy and raising the minimum wage, there is a bigger picture here that is keeping the market interested, says Vladimir Signorelli, head of Bretton Woods Research in New Jersey. He is optimistic on the South Korean ETF.
As for geopolitics, Moon is the right person to open dialogue with North Korea. As an ex-commando and human rights lawyer, he possesses an unimpeachable background to pursue a diplomatic shift toward engagement.