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Korea is the ‘most undervalued’ equity market in North Asia

Korea is the ‘most undervalued’ equity market in North Asia

South Korean stocks are currently the “most undervalued” among the North Asian equity markets, according to one strategist from State Street Global Markets.

South Korea’s market performance has lagged far behind its regional peers so far this year. Into Monday’s market close, the Kospi has only risen around 2.3% year to date. In comparison, Japan’s Nikkei 225 has soared about 17% in the same time period while China’s Shanghai composite has surged approximately 16.9%.

“When we actually look at the Korean equity market, there’s a number of things that we actually like within,” Ben Luk, senior multi-asset strategist at State Street Global Markets, told CNBC’s “Street Signs” on Tuesday.

Luk said investors still seem focused on the Sino-U.S. trade war, but that “there’s basically no details yet in terms of the phase one or even phase two deal that we could anticipate next year.” The ongoing trade fight between Beijing and Washington has lasted for more than a year and has taken a toll on export reliant economies such as that of South Korea.

“What people need to know is that … the trade cycle could be bottoming out,” the strategist said, adding that many global manufacturing Purchasing Managers’ Index figures have been “hovering” in the last few months.

Acknowledging that the worst may not be over as more data needs to be observed on the Asian export side, Luk said: “I think that people are still over excessively under-pricing … the rebound that we could see in many of the North Asian equity markets.”