The recent decline in South Korea’s KOSPI index presents an opportunity to increase exposure to Asian technology, according to Danske Bank investment strategist Lars Skovgaard Andersen.
He points out that investors in general should not focus solely on Western technology.
“The South Korean stock market, the KOSPI, has fallen more than 22% from its peak and is thus technically in ‘bear market’ territory. At the same time, valuations have been pushed down to levels that have historically been extremely rare,” says the investment strategist, noting that the KOSPI index is now trading at its lowest valuation in more than 20 years.
The explanation behind the historically low valuation is a combination of the recent price correction and continued strong earnings expectations among publicly traded companies, notes Skovgaard Andersen.
“This is particularly interesting for investors because Korea is one of the world’s most important markets for semiconductors, with giants like Samsung Electronics and SK Hynix.”
Therefore, South Korea may be an overlooked alternative at a time when many investors continue to focus on the major US winners in the field of artificial intelligence.
“The country offers exposure to the AI and semiconductor themes at some of the lowest valuations globally. If earnings growth holds up, the current pessimism may turn out to be an opportunity rather than a warning.”
“I’ll use this setback to gain exposure to Asian technology. Yes, you get exposure to memory, but you also get humanoid robots, and generally speaking, I believe we shouldn’t focus solely on Western technology when building our portfolios,” concludes Skovgaard Andersen.
Samsung and SK Hynix are major manufacturers of memory chips.