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As the global automotive industry continues its recovery there is particularly bright news for investors in OEMs (original-equipment manufacturers – otherwise known as automakers) that are focused on emerging markets.

The global automotive industry has been more successful than most at producing investor value, says the Boston Consulting Group in a recent report, A Comeback in the Making. Component manufacturers posted a median annual total shareholder return (TSR) – a measure of the value a company creates for its shareholders – of 33 per cent between 2009 and 2013, while OEMs produced a TSR of 29 per cent in the same period. Compare this to a 21 per cent TSR for the 26 global industries tracked by BCG.

But it was carmakers focused on emerging markets that were especially successful at pushing up value for shareholders. Continue reading »

Investors should be extra careful about betting on South Korean banks, given the sector’s frequent internal strife and failures of risk management.

The latest case is Kookmin Bank, the country’s biggest consumer lender. The bank has come under increasing scrutiny after a series of scandals involving an internal power struggle among its top executives and allegations of leaked customer data, embezzlement and illegal loans. Continue reading »

A surge in the popularity of automated banking services in South Korea has slashed the number of people who still use bank branches to a small minority, encouraging industry restructuring.

According to a Bank of Korea research report, only 11.2 per cent of South Koreans used branches as of June, compared with 88.8 per cent using automated channels such as ATMs, internet banking and mobile banking. Continue reading »

“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.

In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.

Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Continue reading »

South Korea’s benchmark Kospi index hit a three-year high this week on the prospect of rising dividends after the government announced tax measures aimed at unlocking billions of dollars in corporate cash reserves. It also unveiled a $40bn stimulus package to boost the country’s flagging economy as Choi Kyung-hwan, the new finance minister, promised to introduce expansionary fiscal policy. Continue reading »

Lee Eun-Seok woke up in the middle of the debris and looked for survivors but it was no use. Seoul had already turned into a huge hive, infested by giant hornets.

So goes the story in Hive, one of the “webtoons” that have become hugely popular in South Korea and which are poised to become the country’s next booming export, according to some bullish forecasts. Continue reading »

South Korean carmakers are up in arms over Chile’s proposed bill to impose an environment tax on diesel vehicles, which is likely to hit Korea’s car exports to the Latin American country and cause diplomatic friction.

Chile is one of the key export markets for Korean automakers such as Hyundai Motor and its affilate Kia Motors, both making rapid inroads into emerging markets. Korean cars are the best-selling imported vehicles in Chile, with 30 per cent of the country’s fast-growing auto market. Continue reading »

South Korean companies, notorious for their insensitivity towards shareholder value, may be incentivised to boost dividends.

The finance ministry said on Tuesday that it is seeking ways to funnel bigger proportions of huge corporate cash reserves into the broader economy as growth in Asia’s fourth-largest economy stalls due to weak domestic consumption with many households plagued by heavy debts. Continue reading »

You might be awkward in the spotlight and less than attractive but that need not stop you from becoming a television star, according to a burgeoning industry that has sprung up in Seoul to train and groom would-be TV announcers.

Korea’s three major broadcasting companies hire only three to five announcers a year, typically to host news or entertainment shows. The jobs are in high demand – a recent opening at the SBS network attracted 2,000 applicants – reflecting the prestige of the country’s successful entertainment industry, as well as an increasingly tough jobs market for young graduates. Continue reading »

Samsung’s smartphones may be losing popularity in China as lower-cost Chinese rivals such as Xiaomi and Lenovo steal a march on the Korean company in the budget segment, but they appear to be coveted in Brazil.

Samsung said on Tuesday its factory near Sao Paulo was attacked by about 20 heavily-armed bandits early on Monday and its workers there were held hostage while truckloads of smartphones, tablets and notebook computers worth about $6.3m were looted.

The robbery – which was played out with B-movie flourishes against a backdrop of the World Cup – would not be a huge financial hit for Samsung with its $60bn cash pile but the theft could ring alarm bells for the world’s largest smartphone maker – which has factories all over the world. Continue reading »

The years of periodic “will-they-won’t-they” chatter about South Korea’s potential upgrade to developed market status are over, at least for now. Index compiler MSCI has finally thrown in the towel.

But rather than bump up Korea (and Taiwan), it has instead decided to boot them off its upgrade watch list. Regardless of your view on the underlying debate, the clarity such a move offers should be welcomed. Continue reading »

Not everything in life is always completely and irredeemably bad, even if you happen to be running an emerging economy. In the case of currency devaluations handed to the big emerging markets over the past year, however, the silver lining has not made up for the cloud.

It was a year ago this week that the “taper tantrum” shook emerging markets, after comments from then Fed chairman Ben Bernanke raised fears of the US central bank tightening monetary policy. Exchange rates dropped sharply in the fragile fraternity of emerging markets with flexible currencies – Brazil, India, Indonesia, South Africa and Turkey. However, bad though the turbulence was – and the panic returned for a short while earlier this year – the currency movements should at least have had the benefit of handing those economies’ exports a competitive advantage through a lower exchange rate.

 Continue reading »

Falling unemployment, improving exports and a rush back into emerging markets assets gave investors plenty of reasons to buy the South Korean won on Wednesday.

But they are not enough to explain the size of the swing in the exchange rate – a rise of more than 1 per cent to a six year high of 1041.75 against the dollar.

Could that be due to a shift in the stance of South Korean policy makers? Continue reading »

South Korea’s stock exchange opened a gold trading platform on Monday with the hope of boosting transparency of gold trades and rooting out shady deals used for tax evasion.

Eight brokerages and 49 dealers were allowed to participate in the market. They will get tax benefits to encourage their active participation and they will be exempted from trading commissions temporarily until March 2015. Importers of gold to be traded on the exchange will also be exempted from tariffs to increase supply. Continue reading »

Oh no, Hyundai Motor has overstated its fuel-mileage figures again. This might be the last thing the South Korean carmaker needs after the company agreed to pay compensation last year for exaggerating its mileage numbers for more than 1m autos sold in the US.

Yet on Monday, Hyundai was expressing “regret” for more over-hyped fuel efficiency claims. Continue reading »