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Top 2 Stocks In South Korea

Jun. 11, 2020 9:22 AM ETHXSCL, SSNLF2 Comments
Khaveen Investments profile picture
Khaveen Investments


  • Analysing the top 50 companies in South Korea, we endeavoured to identify the top few which unequivocally represented the South Korean market.
  • This came in the form of Samsung Electronics and SK Hynix, which undisputedly commands South Korea, and also hold their own on the global landscape.
  • In determining the prospect of buying these 2 stocks, we analysed not just these companies in depth, but also the South Korean economy and the semiconductor memory industry.

Top 2 stocks South KoreaSource: Samsung, SK Hynix

Samsung Electronics (OTCPK:SSNLF) & SK Hynix (OTC:HXSCL) take the crowns as the top 2 companies in South Korea. Samsung making the top 2 is hardly a surprise, as it is also the world's 16th largest company by 2019 market cap ($278.7 bln) and the world's largest semiconductor company by 2018 total revenue ($221.5 bln). In terms of South Korea, Samsung holds the no. 1 position for total revenue, while Hynix with $36.8 bln holds the only the 10th position. However, when looking at 2018 net earnings, Hynix jumps to 2nd place with $14.1 bln in net income, behind Samsung with 39.9 bln in net income. Accordingly, this feat translates into these 2 companies accounting for 21.9% of the entire Korean Stock Exchange market capitalization. Hence, we refer to these 2 companies as the Korean Duo or K2.

The fact that K2 are extremely profitable, is no surprise as they are both semiconductor companies (which have extremely high margins). The semiconductor industry is the forefront of technology, digitalization and automation. These companies enable new technologies for emerging markets such as Artificial Intelligence, Cloud Computing, 5G, Internet of Things, Autonomous & Electric Vehicles and Augmented & Virtual Reality. What is amazing is that the combined net income of K2 ($54.0 bln) in 2018 surpasses that of the combined net income of the remaining 48 of the top 50 companies in South Korea ($43.9 bln). Finally, both companies operate under a larger group or chaebol - defined as a family-controlled industrial conglomerate of South Korea (a common occurrence in the country).

South Korean Economy

South Korea is the world's 12th largest economy, and Asia's 4th largest economy (behind China, Japan and India). According to the International Monetary Fund, South Korea is classified as an advanced economy, being just one of

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Khaveen Investments profile picture
Khaveen Investments is a Global Macro Quantamental Hedge Fund managing a portfolio of globally diversified investments. With a vested interest in hundreds of investments spanning diverse asset classes, countries, sectors, and industries, we wield a multifaceted investment approach that combines top-down and bottom-up methodologies, integrating global macro, fundamental, and quantitative investment strategies. We serve accredited investors throughout the globe, which include HNW Individuals, Corporates, Associations, and Institutions. At the heart of our investment prowess lies specialized expertise in cutting-edge technologies that are reshaping the fabric of numerous industries. Our strategic orientation centers around a spectrum of booming domains, encompassing the transformative realms of Artificial Intelligence, Cloud Computing, 5G, Autonomous & Electric Vehicles, FinTech, Augmented & Virtual Reality, and the Internet of Things.www.khaveen.com

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SSNLF over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

No information in this publication is intended as investment, tax, accounting, or legal advice, or as an offer/solicitation to sell or buy. Material provided in this publication is for educational purposes only, and was prepared from sources and data believed to be reliable, but we do not guarantee its accuracy or completeness.

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Comments (2)

boombustvalue profile picture
I specialize in Korean equities. The chaebols have horrible corporate governance. Yes there is Chaebol reform now, but it is just too complex to fully understand all the cross holdings, and very high risks. There are so many better, higher quality small cap companies with much cleaner corp governance structures in Korea that no one knows about !
A question - you mention that you may initiate a position in SSNLF in the next 72 hours? How would you do that? I have been trying to buy SamSung shares on and off for years with no success. The best deal from Merrill Lynch was I would open a South Korean account and make a minimum purchase of $50,000. Is there another way? Aside from ETFs?
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