Samsung Asset Management Co., South Korea’s biggest asset manager, bought shares of LG Chem Ltd. (051910), Posco along with telecom and utility companies on the prospect of improving earnings this year, its head of equities said.
“I believe those companies could generate decent earnings growth this year, though the economy is likely to post a mild recovery,” Samsung Asset’s Nam Dong Joon said in an interview yesterday. His flagship fund has beaten 98 percent of its peers over a three-year period, data compiled by Bloomberg show.
LG Chem, the biggest South Korean chemicals maker, Posco, the country’s No. 1 steelmaker, and SK Telecom Co., the largest wireless operator, may post at least 16 percent growth in operating earnings this year, while state-monopoly Korea Electric Power Corp. (KEP:US) will swing to profit, according to the average of analyst estimates compiled by Bloomberg.
The Kospi index (KOSPI) rose 0.6 percent to 2,003.06 at 12:19 p.m. in Seoul, the first advance in six days. The measure has gained 0.3 percent this year after climbing 9.4 percent in 2012. Companies on the Kospi trade at 9.2 times estimated profit, versus the five-year average of 10.9, making the nation’s stocks the cheapest in Asia after Pakistan, according to data compiled by Bloomberg.
Nam’s Samsung For You Korea Representative Securities Investment Trust 1 returned an annualized 15 percent in the past three years. Samsung Asset manages about $119 billion in assets.
LG Chem and Posco (005490) have diversified products, shielding them from “external risks,” Nam said. SK Telecom will boost its average revenue per users as it lures more subscribers to pay for faster services, he said.
The government’s regulations against utilities are likely to ease, he said. South Korea will raise electricity prices by an average 4 percent starting next week, the Knowledge Economy Ministry said in an e-mailed statement yesterday.
South Korea’s gross domestic product will expand 3 percent in 2013, compared with an estimated 2.1 percent growth last year, according to the Finance Ministry.
Korea Electric Power, which climbed 19 percent last year, rallied 3 percent to 32,600 won today, bound for the highest close since October 2010. Korea Gas Corp. (036460), the world’s largest buyer of liquefied natural gas, added 3.1 percent to 77,800 won after surging 80 percent in 2012.
SK Telecom, which posted a 7.8 percent gain last year, climbed 1.3 percent today, while LG Chem added 1.4 percent. Posco, which fell 8.2 percent in 2012, advanced 0.4 percent.
Credit Suisse Group AG this month set a year-end Kospi target of 2,350 points, which implies an 18 percent gain from yesterday’s close, citing signs of improvement in the U.S. and China.
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