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I linked to your post for my Monday EM links collection post: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-october-28-2024 I don't think I have seen other Substackers, except maybe Douglas Kim's Korea focused Douglas Research Insights https://douglasresearch.substack.com/, cover SK Hynix although alot of funds own it and its a key semicon player...

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@emergingmarketsceptic your observation is interesting. I always found it very strange how Micron, which runs in third place by market share to both SK Hynix and Samsung, collectively a de-fact oligopoly in the memory industry, gets far more coverage than the other two. It is no coincidence that Micron is a US company while the others are South Korean. US investors make up the lions-share of active retail investing in equities (most other places in the world retail investors simply put their money to work in funds). Overlay that with the undisputed fact that US investors have always favoured domestic companies to those overseas and this results in information and valuation dislocations with US firms usually trading at unjustified premiums to their foreign counterparts. This is an opportunity for intelligent investors to cast their net wide and to catch the better value opportunities.

Just compare the nonsensical valuations of Baidu, Tencent and Alibaba to their US counterparts. It makes no sense at all. There will be a rebalancing in time.

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The problem with Korea is the so-called Korean discount aka very wealthy families control many big Korean companies like Samsung and will have to pay HUGE inheritance taxes on the value of their shareholdings... hence... there is no incentive to do things to increase the share price while its hard politically to argue why millionaires and billionaires should have lower inheritance taxes... Korea is trying to address the Korean discount with the corporate value-up initiatives BUT AGAIN it ultimately goes back to cutting inheritance taxes and politicians trying to explain to voters WHY this will ultimately benefits every Korean (aka their pensions and any smaller shareholders/investors...)... Until something changes dramatically, Korean stocks can sort of be value traps but ones that sort of hold their value (ignoring rocketman and F/X risks etc...) and can pay good dividends - there is also a closed end fund listed in London focused on Korean preferred stocks...

As for Chinese stocks, remember... in the event something happens, Cayman Island registered entities have no real rights or enforceable claims to any assets in China... You don't have those risks with Korean stocks...

And also remember, the USD has been very strong e.g. When I began more or less living in Malaysia, RM3 = US$1... It was as low as RM4.8 = US$1 during all the recent political noise during COVID but suddenly went back to as high as RM4.08 several weeks ago but its now RM4.37 and seems to be trending lower........

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I hadn't considered the inheritance tax angle. Interesting.

Much of the time in Asia it is a cultural issue. Japan being the perfect example. They are risk adverse, insiders typically are not shareholders so no incentive to enhance value, they simply hoard cash. Many of these companies have cash balances exceeding their market cap, implying that you are getting a business for less than nothing. But they have been value traps because unlocking that value has been almost impossible. So with huge cash balances, returns on equity are awful. It is so bad that the government and Tokyo Stock Exchange have intervened, essentially forcing public companies to be more efficient.

You mention dividends, but contrary to popular opinion, these are generally bad for investors. They are partial liquidations of the business. If you don't believe me, check this out: https://rockandturner.substack.com/p/how-dividends-destroy-shareholder-value

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