Expectations for South Korean stock market re-evaluation are growing... What risk variables should we look at now? | Kim Jeong-nam, former Head of Netherlands Pension Asset Management

Summary

Kim Jeong-nam discusses Korean market re-rating potential driven by governance reform and cheap valuations, while flagging volatility risks from Samsung Electronics, SK Hynix, and leveraged ETFs. He identifies real interest rates and AI value-chain financing as key market risk variables. He also lays out a long-term investing approach favoring broad index ETFs, especially the S&P 500 and Korean index exposure, over thematic ETFs.

• Korean market re-rating supported by governance reform and about 70% of KOSPI companies trading below 1x price-to-book.
• Korea's volatility is amplified by heavy Samsung Electronics and SK Hynix concentration and leveraged ETF flows.
• Real interest rates near potential growth are a key risk; rate step-up without demand growth would pressure risk assets.
• AI value chain is split into frontier labs, hyperscalers, and hardware suppliers; Anthropic's IPO is a reflexivity risk worth watching.
• Google's recent DeepMind-related sell-off is seen as overdone given its engineering talent and capital.
• Long-term broad index ETF investing is preferred over thematic ETFs, with S&P 500 and Korean index exposure favored.
• Fed and Treasury intervention views suggest large long-end Treasury buybacks are unlikely under Kevin Warsh and Scott Bessent.