JPMorgan Asset bullish on exports

JPMorgan Asset Management has been buying Korean electronics and auto stocks in recent weeks, saying concern that the won’s strength will erode exports is overblown after valuations fell to eight-year lows.

“We have been adding into weakness,” said Grace Tam, a Hong Kong-based global market strategist at JPMorgan Asset, which oversees about $1.5 trillion. She declined to name specific stocks. “People worry about the competitiveness of Korean exports. We think this is overdone.”

The Kospi index has dropped 4.9 percent from last year’s high on Oct. 30 as the won strengthened 5.9 percent against the yen.

The benchmark index’s valuation fell to about the same level as its companies’ net assets last week, a 50 percent discount versus the MSCI All-Country World Index, the widest gap since July 2005.

Bank of Korea Gov. Kim Choong-soo may lower the nation’s benchmark interest rate by a quarter-percentage point today to mitigate the won’s gains and spur growth, according to Goldman Sachs. Improving growth in advanced economies including the U.S. will give Korean exporters a boost in coming months, Tam said.

The International Monetary Fund plans to raise its global growth forecast in coming weeks, Christine Lagarde, the fund’s managing director, told reporters in Nairobi.

“The Korean market is still very cheap,” Tam said. “Recent declines gave us good entry points.”

Bloomberg