April 20, 2024

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[THE INVESTOR] Global investment management firm Barings is positive on Samsung Electronics despite the recent devaluation in the tech giant’s share price, a top executive said on March 20. 

“We haven’t sold our position (in Samsung Electronics), but (it’s true) that the stocks have underperformed recently,” William Palmer, co-head of emerging market equities at Barings, told reporters during a press conference in Seoul. “The reason for the recent short-term underperformance is because some investors are worried about weaker memory chip prices.”

“This does not concern us because we are a mid- to long-term investor. And we continue to believe that Samsung will remain very innovative and occupy a market leading position through its continued investments in advanced technology,” Palmer said, adding that the recent decline is actually an opportunity to increase exposure in Samsung. 

William Palmer, co-head of emerging market equities at Barings

Palmer, who manages Barings’ flagship Global Emerging Market Fund, said in his opinion the latest signs of improving inter-Korea relations could diminish the long-standing “Korea Discount.”

“From an investment perspective, the Korean market has historically suffered a discount due to perceived poor corporate governance and geopolitical risks,” he said. “There is potential for the market rating and valuation to improve as political risks decline.” 

He added, however, that it is far too early to identify which companies will benefit in such a scenario. 

At the press conference, Palmer shared a rosy outlook for emerging market equities, citing improving profit margins and sales volumes at major corporations. 

“There has been a strong recovery in corporate profits from 2017, and we believe this is just the first of several years of sustainable corporate growth. We expect equity prices to follow corporate profits higher over the coming years,” he said. 

The emerging markets refer to 24 countries defined under Morgan Stanley Capital International, which also includes Korea and China, as well as Taiwan, India and Indonesia. 

Among them, Palmer said China has many attractive investment opportunities in its equity market that is likely to continue to perform well this year. 

“In China, we continue to see lots of investment opportunities within information technology, financials and consumer space,” he said. “In Korea, we believe the outlook has improved considerably in the banking sector after many difficult years. The key positive drivers are improvement asset quality, steady loan growth, expanding net interest margins and better cost management.”

By Ahn Sung-mi (sahn@heraldcorp.com)