Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

<p><strong>Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.</strong></p>

Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.

Samsung KODEX Leverage ETF Equ (122630 KS)

Mirae Asset TIGER KOSDAQ150 Biotech ETF (261070 KS)

No Upside For Korean Companies - Underweight