Korea offers a reliable investment opportunity despite the MSCI continuing to classify it as an emerging market, a decision that means it is a 'big fish in a small pond', says Hyung Jin Lee, manager of the Baring Korea Trust.
The portfolio manager believes the MSCI will eventually follow the FTSE's lead in reclassifying Korea as a developed market, and said this would be a positive move for Korean corporates. However, he does not expect this to happen for some time.
In the meantime, investors can benefit from exposure to Korea because of its position as an important trading partner to developed markets such as the US as well as to emerging markets like India and China.
Hyung Jin predicts that Korean carmakers as well as technology and industrial companies will make progress in the next ten years. He also foresees a boom in the travel and tourism sectors as Korean and Chinese consumers begin to enjoy greater disposable incomes.
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