Country focus: Republic of Korea
A feature of POWER Shares – 'Asian Lions' is the portfolio invests in countries benefitting from strong Chinese growth rather than investing in its high-risk stockmarket directly.
Countries are chosen by their economic growth prospects. For example, the portfolio is currently not investing in Japan, which has a weak growth outlook.
At inception, the stock portfolio will be drawn from the high-growth economies of Korea, Taiwan, Hong Kong, Malaysia and Singapore.
Shares in Korea fell almost 17% (in Singapore dollar terms) in the first quarter of 2008 on the back of the global equity market sell-off. The Korean market was up 5.6% in April.
Lion Capital, the fund manager that manages POWER Shares – 'Asian Lions', believes the medium-term outlook for Korea is promising.
Lion Capital likes Korean companies that will benefit from increasing infrastructure investments in Korea and an expected real estate recovery.
Lion Capital also favours Korean banking stocks as the government starts to reform that industry, as well as the insurance sector.
As the table below shows, Korea is still one of the most attractively priced markets in Asia on an average forecast PE multiple of only 12 times 2008 earnings and 10.6 times 2009 earnings.
Korean stocks in POWER Shares – 'Asian Lions' portfolio include the quality blue chips:
- Woori Finance
- S-Oil Corp
- KT & G Group
