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Korean equity market safe from emerging market trap: AllianceBernstein

A screenshot shows a webinar on the outlook of global stocks and bonds market held by AllianceBernstein on Tuesday. Lee Chang-hyun (center), CEO of AllianceBernstein Asset Management Korea, moderated the sessions. Senior investment strategist David Wong (right) and Yoo Jae-heung, senior portfolio manager of fixed income at AllianceBernstein’s Korean unit (left), participated as speakers. (AllianceBernstein)
A screenshot shows a webinar on the outlook of global stocks and bonds market held by AllianceBernstein on Tuesday. Lee Chang-hyun (center), CEO of AllianceBernstein Asset Management Korea, moderated the sessions. Senior investment strategist David Wong (right) and Yoo Jae-heung, senior portfolio manager of fixed income at AllianceBernstein’s Korean unit (left), participated as speakers. (AllianceBernstein)

Despite a gloomy outlook on emerging countries’ equity market due to the pandemic impact and corporate regulations hindering growth, prospects for South Korea remain positive, driven by quality companies’ exceeding performance on long-term growing industries, an analyst at global asset management firm AllianceBernstein said Tuesday.

“Korea is quite sensitive to global growth. Since global growth especially in developed markets remain quite strong, we also have a fairly constructive perspective on Korean equity markets that is no longer categorized as an emerging market,” David Wong, senior investment strategist at AllianceBernstein, told reporters at a webinar on the firm’s second global capital market outlook this year.

He said recovery signals from COVID-19 are generally uneven throughout less-developed countries. As for China, it is having a wave of negative sentiment due to regulatory pressures on a number of industries that leads to contraction in the market, Wong added.

Wong mentioned that a lot of Korean companies are exposed to long-term growth drivers such as electric vehicles or renewable energy industries.

As for investment strategies, Wong recommended looking to quality companies that produce a better rate of return than similar companies with undervalued stock.

“It is important not to bet excessively on macro recovery or put all of our bets necessarily in either growth or value stocks. We recommend investors to consider investing in companies and industries that have very long-term tailwinds of growth,” Wong said.

Meanwhile, Yoo Jae-heung, a senior portfolio manager of fixed income at AllianceBernstein’s Korean unit, said the company recommends a “barbell strategy,” where its fixed income portfolio is a dynamic mix of a high-yield or emerging markets’ corporate bonds and other credit assets with high-quality government debt or undervalued corporate bonds.

Based in New York, AllianceBernstein managed $697 billion worth of assets as of end-2020.

The company established a Korean unit in 2003. The Korean arm, AllianceBernstein Asset Management Korea, managed 2.5 trillion won ($2.17 billion) in assets as of March.

By Byun Hye-jin (hyejin2@heraldcorp.com)
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