Market's view on Weiss Korea Opp
Published on April 2024
- Korean stocks are highlighted as undervalued, especially when compared to global counterparts, which might present a buying opportunity.
- Weiss Korea Opportunity Fund Ltd. records varying Net Asset Values over several months, with values like 183.72p on 22nd March 2024, 164.47 on 29th November 2023, and 197.23p on 27th January 2023.
- Detailed portfolio statistics for Weiss Korea Opportunity Fund as of 29th February 2024 show heavy investments in preference shares with a high percentage of NAV invested, and plans to rebalance towards shares trading at larger discounts.
- Korean preference shares offer a cost-effective entry into major companies like Samsung and Hyundai, as they often trade at significant discounts compared to common shares, providing both high dividend yields and lower P/E ratios.
- The structure and benefits of Korean preference shares are discussed, noting they typically lack voting rights but offer equal dividend rights as common shares.
- South Korea’s economic standing and innovation in sectors such as electronics and automobiles are acknowledged, but issues like corporate governance and the influence of family-controlled conglomerates (chaebols) dampen market valuations.
- Government efforts towards improving corporate governance and investor rights in South Korea could lead to a market re-rating and reduce the valuation gap with global markets.
- For those interested in the Korean market, preference shares are seen as an attractive investment due to their substantial discounts to common shares and the potential for restructuring and improved governance to narrow these discounts.