investingfromtheright

I am retired and take educated guesses on all things financial.

July 12, 2009

July 13, 2009: South Korea Poised To Excel

As South Korea tolerates the threats from the sputtering dictatorship of North Korea, I believe that now is a good time to consider speculating that the wild gyrations of gang up north are a bluff as the government begins to wobble and weave with the ultimate result a change in leadership, father to son or other. In any event, North Korea's feudal state cannot continue and whomever or whatever gains the reigns of power will have to make economic and political accommodations with South Korea as well as her other contiguous neighbors. North Korea's two strongest allies (Cuba, Iran, Syria and Venezuela aside), China and Russia, must be getting fatigued with the pathetic missile tests and computer hacking akin to a child screaming for attention. It is no longer worth their efforts to prop up North Korea, as the geo-political game has changed to other points of focus.

As all of South Korea will stand to prosper with a diminished or collapse of North Korea, I recommend investor's consider iShares' MSCI South Korea Index ETF (EWY). Trading at approximately $35.50/share, this $1.9b ETF with an expense ration of 0.63% presents cheap and diversified entry into this country's stock.

Top holdings include Samsung Electronics (17%, far and away the largest holding), Posco, KB Financial Group, Shinhan Financial Group, Hyundai Motor, LG Electronics, KT&G Corporation, Samsung Electronics Preferred, Korea Electric Power and LG Display Company.

Top sectors within the ETF are:

Information Technology (27.48%)
Industrials (16.68%)
Financials (16.32%)
Materials (13.23%)
Consumer Discretionary (11.05%)
Consumer Staples (5.74%)
Telecommunication Services (3.68%)
Energy (2.70%)
Utilities (2.30%)
Health Care (0.66%)

North Korea is playing war games such as has not been expressed since the mid-1950s. My guess is that this is the beginning of a death spiral that may unify the Korean peninsula with the capital being Seoul - and with democracy and your investment dollars winning big at the expense of the little men of Pyongyang.

I do not own EWY at this time.

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