South Korea remains investable for 2025 despite the ongoing political turmoil, as per a BNK Securities researcher.
Kim Sung-no cited a recent Bloomberg survey in which 18% of the participants indicated no plans of adjusting their estimates for the country’s economic growth rate in 2025.
A whopping 64% predicted no change to its sovereign credit rating either.
South Korean markets ended on a mixed note today after the National Assembly impeached President Yoon Suk Yeol for announcing an emergency martial law on December 3rd.
What political turbulence means for South Korean markets
Prime Minister Han Duck-soo took the helm from President Yoon as he was relieved of his state duties in light of the impeachment on Saturday.
The matter has now passed on to the Constitutional Court of South Korea to confirm or reject his removal.
Still, Kim Sung-no remains positive on the country’s financial markets as they typically rely on fundamentals and not on political upheavals.
Historically, he added, political turbulences have failed to result in anything more than short-term volatility in the markets.
Nonetheless, Kim pushed for urgency in implementing recovery measures to avoid an economic recession since it’s known to serve as a source of a significant financial shock.
Here’s why you should invest in Samsung and Kia
Foreign investors do, however, expect the martial law fiasco to weigh on South Korean won in 2025, as per quoted Bloomberg survey.
That makes the case for owning shares of the country’s export-oriented companies like the automotive giant Kia or the electronic behemoth Samsung.
A weaker South Korean won could make their products cheaper for foreign buyers, improving their competitiveness in international markets and boosting their sales.
Such a potential lift to revenues could ultimately reflect in Kia and Samsung stocks – both of which have had a terrible 2024 and are, therefore, trading at attractive valuations at writing.
Shares of Kia and Samsung Electronics currently pay a healthy dividend yield as well that makes up for another good reason to own them.
South Korean stocks are trading at a discount
Note that Kim is not alone in keeping constructive on South Korea.
Arjun Jayaraman of Causeway Capital also sees a lot of the negativity related to the martial law fiasco to already be priced in the country’s financial markets.
“South Korea is a quite cheap market. We take heart in the fact that the democratic government seems supportive of the value up initiative. So, the value is certainly compelling there,” he argued in a recent interview with CNBC.
Jayaraman also recommended buying Kia stock at the time due to its export-oriented business.
In October, the automaker raised its full-year guidance after reporting record operating profit and sales for its third fiscal quarter.
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