April 19, 2024
Stocks & Bonds
Korean stocks are world’s most undervalued: study
[THE INVESTOR] Korean stocks are the most undervalued in the world, being cheaper than not only those in advanced countries but also emerging economy shares, according to local experts on Feb. 26.
According to data by Samsung Securities and local reports, the previous 12-month price-earnings ratio in the domestic stock market was 9.6-to-1, much lower than the averages of the MSCI’s emerging and advanced market indexes.
The price-earnings ratio is the ratio for valuing a company by measuring its current share price compared to its per-share earnings. The ratio is used by investors as a measure of whether a share is overpriced. The lower the ratio, the lower the price of stock compared to its associated profits.
The US stock market ranked at the top of the pack among developed nations with a P/E ratio of 18.5-to-1, followed by Japan at 15.9-to-1, Hong Kong at 15.9-to-1, United Kingdom at 14.8-to-1, France at 14.7-to-1 and Singapore at 13.9-to-1.
Among emerging countries, the Philippines was listed with an average P/E ratio of 17.8-to-1, followed by India at 16.8-to-1, Indonesia at 15.5-to-1, China at 12.5-to-1 and Russia at 9.7-to-1.
In addition to low dividends and poor corporate governance, some experts attribute the undervaluation of Korean stocks partly to investors’ low expectations for listed companies’ growth as well as uncertainties growing over conflicts with the high-altitude missile defense system and the US interest rate hike.
By Julie Jackson/The Korea Herald (juliejackson@heraldcorp.com)
According to data by Samsung Securities and local reports, the previous 12-month price-earnings ratio in the domestic stock market was 9.6-to-1, much lower than the averages of the MSCI’s emerging and advanced market indexes.
The price-earnings ratio is the ratio for valuing a company by measuring its current share price compared to its per-share earnings. The ratio is used by investors as a measure of whether a share is overpriced. The lower the ratio, the lower the price of stock compared to its associated profits.
The US stock market ranked at the top of the pack among developed nations with a P/E ratio of 18.5-to-1, followed by Japan at 15.9-to-1, Hong Kong at 15.9-to-1, United Kingdom at 14.8-to-1, France at 14.7-to-1 and Singapore at 13.9-to-1.
Among emerging countries, the Philippines was listed with an average P/E ratio of 17.8-to-1, followed by India at 16.8-to-1, Indonesia at 15.5-to-1, China at 12.5-to-1 and Russia at 9.7-to-1.
In addition to low dividends and poor corporate governance, some experts attribute the undervaluation of Korean stocks partly to investors’ low expectations for listed companies’ growth as well as uncertainties growing over conflicts with the high-altitude missile defense system and the US interest rate hike.
By Julie Jackson/The Korea Herald (juliejackson@heraldcorp.com)
