Korean stocks undervalued compared to Japan
Korean shares are vastly undervalued compared to Japanese, the local stock market operator said yesterday.According to the Korea Exchange, Korean shares’ price-earnings ratios, or the ratio of a company’s share price to its per-share earnings, are low. A lower price-earnings ratio can mean the shares are undervalued.
Based on the Korea Exchange’s study, medical equipment had the highest price-earnings ratio for Korea at 36.1, but Japan showed a ratio of 46.9 in the same sector.
Korea’s transportation and storage sector had the lowest at 7.03, but Japan scored 32.8 in that industry.
Korea also trailed Japan in most other categories, including machinery, insurance, pharmaceuticals, securities, communication and steel.
The stock indexes in the two countries showed a large gap in price-earnings ratio. The Topix Index on the Tokyo Stock Exchange showed a price-earnings ratio of 28.5, whereas the Kospi 200, an index of 200 Korean stocks that make up 93 percent of the total market value here, was only 11.03. The gap has widened since the end of last year, as the Topix’s ratio has gone up about 0.8 percent and the Kospi 200’s ratio has fallen 0.5 percent so far.
By Yoo Jee-ho Staff Writer [jeeho@joongang.co.kr]
with the Korea JoongAng Daily
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