KF - Korea Fund: The Wind Is Still In Its Sails
2024-05-01 20:27:17 ET
Summary
- Korean large-cap fundamentals remain very attractive.
- The Korea Fund stands to benefit from more tech-led outperformance.
- A narrowing NAV discount adds compelling optionality.
All eyes this year have been on Korea’s corporate ‘value-up’ program, which much like the Japanese reform playbook, is aimed at incentivizing domestic companies to focus more on shareholder-friendly governance. While the prospect of a ‘value-up’ boost to Korea’s perennially discounted stocks had helped the likes of JPMorgan-managed ( JPM ) Korea Fund ( KF ) grind higher since I last covered the fund (see Korea Fund: Brighter Skies Ahead ), the market appears to have turned slightly more skeptical post-election defeat for President Yoon this month. This seems a tad unfair, in my view, as governance reforms are a bipartisan issue, rather than one solely dependent on President Yoon’s mandate. Even if we do see a slower rollout pace and hurdles on the fiscal front (e.g., tax breaks, a key sticking point for the opposition party), the scale of Korea’s value unlocking opportunity means investors willing to tough out some near-term road bumps stand to be well-rewarded....
Korea Fund: The Wind Is Still In Its Sails