SPY - EWY: South Korea Is Cheap But Downside Risks Are Growing
- South Korean equities are cheap on a relative basis, although part of this can be explained by the sectoral composition of the market.
- South Korean stocks are consistently traded at low multiples.
- Tech companies in South Korea may be less vulnerable to a bursting of global tech valuations, but the country has an extreme energy vulnerability.
- South Korea may have a more immediate geopolitical vulnerability than anywhere else in Asia, including Taiwan.
- As geopolitical conflict shifts to the Indo-Pacific, South Korea will be forced to align more closely with an anti-China alliance, thus pushing forward both general geopolitical risks and specific risk to its energy lifeline.
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EWY: South Korea Is Cheap But Downside Risks Are Growing