Published Wed, 13 Jun 2018 12:30:43 -0400 on Seeking Alpha
The big geopolitical-cum-investing question is whether the Trump-Kim peace summit was for real and thus whether a consequent lifting of military risk from the Korean peninsula will make cheap South Korean (NYSEARCA: EWY) stocks a genuine bargain.
I don’t think anybody, including North Korea’s dictator Kim Jong Un, whose innermost intentions are a key part of this puzzle – knows the answer for sure. In an article on today’s Seeking Alpha, Rob Marstrand expresses this uncertainty, albeit with a cautiously optimistic tilt.
The latest developments are certainly positive, but I'd like to see some concrete actions before sounding the ‘all clear’ sirens.”
While waiting for these concrete actions, he goes on to offer an analysis of the investment value of South Korean stocks, which he generally regards as a pretty good deal in today’s markets, pending clarification of the political situation:
The MSCI Korea Index still looks on the cheap side. At the end of May, it had a price-to-earnings (P/E) ratio of 9.9, a price-to-book (P/B) ratio of 1.1 and a dividend yield of 1.9%. That dividend yield is about the same as the S&P 500 index. But the P/E is just 40% of the US index and the P/B is 32%.”
The deal thus to be had may even warrant “dipping a toe” while “waiting for more concrete progress,” he says.
My own conclusion is more or less the same. Here’s why. First, based on my... Read more