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APAC Equity Research Reports

Original research on over 1,300 companies, with a total market capitalization of USD 17.16 trillion. It provides thought-provoking thematic analysis, differentiated trading ideas and coordinated global views.

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January 12, 2022

South Korea: A gradual normalization with uncertainties

We expect economic growth to moderate from 4.0% in 2021 to 3.4% in 2022 owing mainly to the memory chip down-cycle in Q421-Q222 and a shift in global demand from goods to service consumption. Facilities investment will likely moderate in 2022 as well after aggressive private investment in chip facilities during 2020-21. The recovery of services activities and construction investment will likely be offsets to the decline in growth. Policy should become less accommodative with additional rate hikes and negative fiscal impulse. We also expect nominal export growth to moderate from double-digit growth in 2021 to single-digit growth in 2022.
November 29, 2021

Korea Market Strategy - Set for a better year ahead

We are keeping our KOSPI target of 3,400, 11.3x on the 12M forward earnings outlook. The key reasons why we see an upside for the KOSPI from the current level is solid earnings growth, global industrial production rebound, longer-term dollar weakness, and the backdrop of presidential elections in 2022. We continue to like the cyclicals and expect tech, autos, consumer/retail, and banks would perform well in 2022.

November 25, 2021

Korea Unicorns: The next generation of up-and-coming corporates in Korea

Korea is the third-largest source of unicorns (commonly defined as start-up companies with a valuation of >US$1 bn) in Asia, based on data by CB Insights as of Jun-2021. New investments made in start-ups have surged in 2021, rising to W5.3 tn as of Sep-2021, up 82% YoY. Biotech, retail, and internet-based service companies continue to be the largest destinations for investments.

January 04, 2021

Korea Market Strategy - Raise our KOSPI target to 3,200

We raise our KOSPI target to 3,200 from previous 2,800, which represents 12.5x 2022E EPS. Ongoing earnings upgrades, USD weakness, improving economic indicators, and strong liquidity are our reasons to see higher upside. The weak USD environment will likely be a strong tailwind for the KOSPI, as its performance has historically had a good correlation to KRW strength vs the USD. We continue to prefer tech, autos and banks.

October 13, 2020

Asia Pacific Strategy: Korea remains our top pick

Korea has been APAC's best-performing market since global markets bottomed in March, We expect Korea to generate the sharpest earnings recovery in the region this year and next. Currency trends benefit Korea. Sector-specific factors are turning in favour of Korean IT, autos, and banks.

September 30, 2020

South Korea: Intensifying headwinds

Our 2020 growth forecast for South Korea is now -1.9%, led by the emergence of another wave of COVID-19. However, we keep our 2021 forecast unchanged at 2.9%, expecting stronger private investment fueled by Korea's "New Deal" and a recovery in exports. We expect though the government's contribution to growth to be substantially smaller in 2021. We continue to expect a moderate recovery in Korea's exports for H220 but with higher downside risks, especially for tech sector exports. Despite many uncertainties, we expect increasing domestic investment to support 2021 growth.

August 18, 2020

Korea Market Strategy: Value will continue to catch up

We raise our KOSPI target to 2,600 from 2,300 previously. Key reasons why we see further upside for the market, despite the index now having reached new highs in 2020, are: (1) ongoing weakness of the USD, which has historically coincided with foreign investors buying the market and a higher KOSPI; (2) short-term economic indicators starting to improve, (3) earnings downward revisions stabilising and (4) the valuation is still undemanding on P/B amid strong liquidity support. The weak USD environment will likely continue to be a tailwind for the KOSPI. Our preferred sectors are tech, autos and banks.

June 24, 2020

Emerging Markets Quarterly: South Korea: Gradual recovery on the way

We are downgrading our 2020 growth forecast further from 0.8% to a technical recession of -0.2% as COVID-19 has negatively affected Korea's businesses and households. We expect a gradual recovery in H220 led by supportive government spending and the recovery of exports driven by tech exports, but the recovery could be bumpy as escalating US-China tensions could pose downside risks to Korea's export outlook.

Consumption and labor market showed signs of improving, but are not back to the pre-pandemic levels yet. The situation remains challenging for them amid the risk of a second wave. We have also revised the 2020 inflation from 0.6% to 0.2% as further uncertainty around the risk of a second wave of COVID-19 inflections will likely slow the expected recovery in inflation.

June 4, 2020

Korea Market Strategy: Climbing back towards eventual normalization

We are raising our year-end KOSPI target to 2,300 from previous 1,900. Our target reflects our view that a sustained economic downturn is likely to be avoided, given good control of COVID-19 in Korea, strong economic stimulus in Korea and overseas, and corporate earnings support from ongoing global reopening and normalisation. 

March 4, 2020

Korea Market Strategy: COVID-19 impact check

We think the direct impact is already being felt across most sectors, and that there will be negative impact from both the demand and supply sides. We continue to believe that the negative impact is more temporary than structural, and expect South Korea to resume its cyclical recovery once the virus is contained. We maintain our KOSPI target of 2,300 and remain Overweight on tech and autos

March 2, 2020

APAC Quantitative & Systematic Strategy: Trading a crisis in Asia: stock picking to sidestep slumps – historical crisis insights

Concerns around what seemed a China-centric epidemic have pivoted to pandemic risks as new coronavirus cases are picking up in multiple continents. Price action and social media trends suggest risks have moved from China to global markets.