South Korean Builders, Exporters May Lead Gain in Stocks, Lion Global Says

South Korea’s biggest builders and exporters may lead gains in the benchmark Kospi stock index this year on expectations they will benefit from the improving global economy, according to Lion Global Investors Ltd.

“We believe that improving global economic outlook will allow exporters to enjoy higher economies of scale, better pricing position and robust earnings growth,” Tan Jenn Yee, a Singapore-based fund manager at Lion Global, which oversees the equivalent of $20.4 billion, said in an e-mail interview today. He likes Samsung Electronics Co. and LG Electronics Inc.

The manager of LionGlobal Korea Fund said resumption of global oil and gas projects, spurred by higher oil prices, should be “key catalysts” for Korean builders that have price competitiveness. He favors Samsung Engineering Co. and Hyundai Engineering & Construction Co. Tan also likes banks as their earnings are set recover this year.

South Korea’s manufacturers such as Samsung Electronics and Hyundai Motor Co. are reporting higher earnings as the global economy recovers from its worst recession since World War II. The nation’s exports rose 35.1 percent in March and industrial production climbed 3.6 percent in February, more than twice economists’ forecasts.

Lion Global’s Korean fund has risen 63 percent in the past five years, beating 87 percent of 149 funds investing in the nation’s stocks, according to data compiled by Bloomberg.

China’s Consumption

Rising global market share by exporters and China’s consumption growth are “multi-year structural themes” for South Korean companies and should “positively” drive South Korean equities in the longer term, Tan said.

His top holdings in the Korean fund include Posco, LG Electronics, Samsung Electronics, KB Financial Group Inc. and Samsung Fire & Marine Insurance Co., Lion Global said.

South Korean manufacturers will benefit from economic growth in emerging markets that may be four times faster than the developed world, Templeton Asset Management Ltd.’s Mark Mobius said yesterday.

The International Monetary Fund said on April 21 the global economy will expand 4.2 percent in 2010, the fastest pace since 2007, compared with a January projection of 3.9 percent.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

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