Fundamentals In Korea Are Incredibly Strong: Taylor

Summary

Sean Taylor, CIO at Matthews, discusses the Matthews Korea Active ETF (MKOR) amid the recent Korean market pullback. He highlights the strong fundamentals of Korean equities, the structural story in memory semiconductors, underappreciated industrial stocks, and surging earnings revisions. He acknowledges overheating from leveraged retail positions but sees the correction as a buying opportunity. Taylor details Matthews' strategy of favoring indirect beneficiaries of Samsung and SK Hynix rather than overweighting the giants directly.

• Leveraged ETF inflows in Korea surged to $55bn and contributed to volatility; new regulations may help short-term.
• Samsung Electronics and SK Hynix are structural AI plays but Matthews reduced direct exposure in global/Asia strategies.
• Within dedicated Korea strategies, Matthews pivoted to indirect plays like holding companies and insurers owning stakes in the chip leaders.
• The Korean market ex-semiconductors trades at nine times earnings, a discount with earnings revisions upgraded from 6-7% to over 30%.
• Taylor points to an ignored industrial angle in Korea as an additional positive driver.
• Fundamentals are sound, the supply chain is very positive, and the correction presents an attractive entry for the MKOR ETF.