Global barometer on the rise
South Korea’s Kospi index has been one of the world’s bestperforming markets this year, says Frances Yoon in The Wall Street Journal. It is up by 11% . The rally has been driven by technology giants such as Samsung and memory-chip maker SK Hynix, which jointly comprise a fifth of the market. The Kospi plunged by 25% last year, its worst showing since the 2008 financial crisis, but investors are betting that the worst of the tech sell-off is now over.
South Korea’s tradedependent economy, the world’s tenth-largest, is considered a key global barometer, says William Pesek in Nikkei Asia. It seems world trade may be holding up better than feared. South Korean exports rose by 3.8% in the first quarter from the previous three months. President Yoon Suk Yeol (pictured) hopes to turn the economy from a “weather vane” into one that makes the weather in its own right. Key to those ambitions is his campaign to have the Korean stockmarket upgraded from an emerging market to a developed one by leading index compiler MSCI. Goldman Sachs estimates that an upgrade could bring $44bn into local stocks as global trackers would be required to buy the Korean market. South Korean blue chips have long suffered from a “Korea discount” thanks to a belief that the country’s family-dominated conglomerates are not run in the interests of ordinary shareholders.
Greater shareholder activism could help to close that gap, says Jacky Wong in The Wall Street Journal. “There were 56 activist campaigns against companies based in Korea” last year, and just 38 the previous year. Activists “also gained 26 board seats last year, more than twice the number two years earlier”. If the campaigns succeed, then a “significant buying opportunity in Asia… could be hiding in plain sight”.