By Reshma Kapadia
South Korea holds the title of the best-performing stock market this year, up more than 80%, but hedge fund managers still see opportunities for investors.
"Korea stands out as the place with more value," Eduardo Marques, founder and chief investment officer of London-based Pertento Partners, said on a panel Tuesday at the Sohn Investment Conference.
Jonathan Lennon, founder and chief investment officer for PLP Funds, sees South Korea as benefiting at a time when countries are reassessing alliances, defense budgets, and supply chains.
South Korea, a leader in shipbuilding and memory chips, is well-positioned now, and the world, he said, is "coming to Korea."
Marques, for his part, suggested using holding companies to find a backdoor way into profiting from SK Hynix and Samsung Electronics, the dynamic duo propelling Korean stocks higher.
SK Hynix trades at six times forward earnings -- cheaper than rival Micron, at 10 times -- and should still be a cash gusher over the next couple of years as it benefits from the artificial-intelligence boom, Marques said.
But there is a cheaper way in. SK Square, the parent company of SK Hynix, trades at a 47% discount to the chip maker, Marques said.
Marques also pitched another holding company: Samsung Life Insurance, which has a health and life insurance business and trades at about 50% book value. It has a 10% stake in Samsung Electronics, allowing investors to buy into the technology company that just hit a $1 trillion market value for a massive discount, Marques said.
Hedge fund managers on a panel with Marques also noted catalysts for Korean stocks more broadly, especially as foreign interest in the market grows -- because of the chipmaking duo -- but also on the back of reform efforts to get companies to improve governance and better allocate capital. Another positive: Interactive Brokers Group just opened up access to Korea's markets for investors.
Another potential catalyst: SK Hynix redistributes 10% of its operating profit in employee bonuses -- a practice Samsung is also beginning to adopt. That's about $36 billion to $37 billion in bonuses coming to Koreans -- a mid-single-digit share of GDP -- which could mean a wider array of opportunities for companies catering to Koreans broadly.
Yet the managers said Korea flies under the radar, even as its stock market is bigger than Canada's and its GDP is the same as Japan's.
Perhaps it's possible to be the best-performing market and still under the radar enough to appeal to bargain hunters.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
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(END) Dow Jones Newswires
May 13, 2026 16:24 ET (20:24 GMT)
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