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South Korean Stock Attractions (Part 2)

5 December 2007 - Features - Editor

South Korean Stock Attractions (Part 1)

South Korean Stocks in a Global Format

Local flavors for marketing and generous budgeting mark South Korean operations abroad. Brand shares are built rapidly without concerns for local profitability. It is apparent that stock value is built almost exclusively at headquarter companies, though trade margins are always expansive. It is apparent that this is a vigorous response to World Trade Organizations guidelines that lower import barriers across the board. The amazing thing is that South Korea is able to quash all opposition from domestic brand owners. Pricing of South Korean brands is very penetrative, especially in terms of offering more features compared to Japanese competition at the same price points.

South Korean companies are heavily centralized at top management levels. This puts them in the same bracket as their Chinese and Japanese counterparts. Investors do not enjoy guidance and quarterly interaction benefits as become the norm with the US and EU corporate sectors. You may therefore hear about South Korean companies only when a major scandal unfolds! Manufacturers and technologists can take heart from the fact that South Korea is not protectionist when it comes to doing business with the country. There is endless scope for companies to add values to their stocks by exporting sophisticated and quality products to Seoul.

The Politics of South Korean Stocks

Reconciliation between South and North Korea will only add to the values of Seoul based stocks. The division has never been natural, and the pro-business attitude of Beijing will surely go a long way in helping the artificial barriers between the halves of the Korean peninsula to be driven away forever. The cultural and social ties between communities on either side of the divide are at least as close as now proven in Germany. The unification of the land will give new potentials for Seoul stocks in agricultural produce, heavy construction, and electronics. There could be many values in the North of which we are not aware at this time.

The management of South Korean stocks presents interesting contrasts between global standards of professionalism and the cultural uniqueness of this ancient culture. Here is a country that combines a strong sense of identity with a $25 thousand per capita GDP that zooms ahead at least 5% per annum. It is a leading economy of the world and seems destined for greater things! Do you have stocks in South Korea?

 


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