Goldman Sachs and Nomura to Cash In on Lotte IPO (GS, NMR, EWY)

Includes: EWY, GS, NMR
by: Steven Towns

South Korea's largest department store operator Lotte Shopping Co., said to be worth up to US$3.8 billion is about to become the largest IPO ever by a retailer. Lotte's planned IPO was covered in a Reuters article today. The article cites a source that says the IPO is already more than three times subscribed, unimpressive by Chinese IPO standards but quite impressive for a big South Korean IPO. Pricing of the deal is expected this Friday with a trading debut set in London on February 8th and in South Korea the following day. Goldman Sachs (GS) and Nomura Holdings (NMR) are underwriting the IPO.

Goldman and Nomura stand to gain some nice profits from their upcoming deal. These two giants are probably the most active and undeniably the best-of-class when it comes to underwriting and deal making in Asia. I am particularly interested in Nomura given this is The Japan Stock Blog. Click on the NMR hyperlink above for more posts covering Nomura including some major news not covered in the American (English) business press. Also, see the Reuters article link above for more details on the Lotte IPO.

I would suggest American and other foreign investors keep their eye on iShares MSCI South Korea Index ETF (EWY). The South Korean economy is growing robustly and optimism is running high in its stock market -- one of the best performing of 2005. Whenever I mention EWY I also like to remind readers that it is dominated by a few companies and primarily by Samsung along with its subsidiaries. Samsung is an amazing company but I have read from different sources that it also accounts for nearly a quarter of all S. Korean economic activity. It makes up over 22% of EWY. However, the banking industry as well as auto manufacturers are strong and improving. LG is also another consumer electronics play. If anything click on the hyperlink to EWY above and review the posts written by myself and other contributors that will provide you with a great background on investing in South Korea.

NMR 1-yr chart:

GS 1-yr chart:

EWY 1-yr chart: