Unrest in South Korea presents investment opportunities, investor says

The recent political unrest in South Korea appears to be short-lived, according to fund manager Arjun Jayaraman, who said there are opportunities for investors in the country.

The portfolio manager at US-based investment firm Causeway Capital Management added that the risks surrounding South Korea’s stock market have now been priced in, following President Yeon Suk-yul’s failed attempt to impose martial law in early December and his decision. Subsequent accountability on Saturday.

“We think Korea is clearly a very cheap market. It’s priced with a lot of negativity,” Jayaraman told CNBC’s “Squawk Box Asia” last week. “The value is certainly compelling there, so we maintain our overweight position.”

Yoon has strived to boost listed companies – and shareholder returns – through the “Corporate Value Increment” programme, a Japanese-style initiative aimed at improving corporate governance and increasing investor participation.

The reforms were also introduced to combat so-called “Korean discounting,” a reference to South Korean securities trading at lower valuations compared to their regional counterparts, due to investor concerns about issues such as corporate governance at large family-owned conglomerates.

But any new government in South Korea would likely continue to push these reforms, boosting revenues, Jayaraman said.

“We are encouraged by the fact that even the more left-leaning opposition Democratic Party appears to be supporting Korea’s ‘Higher Value’ initiative, which should lead to a re-rating of the market, in the medium to long term,” he noted.

South Korea’s opposition leaders say Yoon’s martial law order was an act of rebellion — a claim denied by Yoon, who in turn accused political rivals of creating “false incitement” to bring him down.

Following Yoon’s imposition of martial law – and then reversing it – late on December 3, South Korea’s stock market index fell about 5.5% before recovering most of the losses.