Overseas investment banks target local stocks

Seven out of 10 foreign investment banks plan to increase their portion of Korean stocks next year, citing the country’s solid economic fundamentals and low price valuation, a report showed yesterday.

Citigroup, Barclays and five others said they plan to invest more in Korean equities, while two players, HSBC and Royal Bank of Scotland Group, opted to scale back their stock purchases, according to the report by the Korea Center for International Finance. JP Morgan had a neutral stance, it added.

Nomura Holdings said although the Korean stock market has recently seen growing volatility, it is still an attractive option thanks to its undervaluation and solid fundamentals.

Deutsche Bank said Korea’s stock market is likely to undergo ups and downs in the short term but is expected to see upward momentum in the first half of next year.

Citigroup said the benchmark Kospi, which fell 23 percent in the third quarter, is the most undervalued bourse in Asia, recommending investors to pick up shares of local builders and telecommunications companies, according to the report.

The report also showed that foreigners’ appetite for local stocks waned from a year ago due to global uncertainties. Last year, nine out of 10 investment banks said they planned to increase investment in Korean equities.

The investment banks said the impact from the euro zone crisis is likely to be limited, but warned the slowing global economy could weigh down the stock market. They also said Korea may see a slowdown in exports from advanced countries.

Yonhap