In this piece, we will take a look at the ten Korean stocks listed in the U.S. If you want to skip our introduction to Korean businesses and want to jump ahead to the top five stocks in this list, then check out 5 Korean Stocks Listed in the U.S.
South Korea, officially known as the Republic of Korea, is one of the largest economies in the world. It had a gross domestic product (GDP) of $1.65 trillion in nominal terms as of 2022, making it the 13th biggest economy in the world. And while some countries, like the U.K. or the U.S., have had large economies for decades, South Korea, like India has only recently risen to economic prosperity.
In fact, Korean economic history before the paradigm shift in its economy is typical of a third world country. Ruled by its military for much of its history after the partition of the Korean peninsula, South Korea suffered from corruption and poor governance as its civil service was put in place by the Japanese during their colonization. After the second world war, America was the biggest aid provider to South Korea, often accounting for as much as 80% of the country’s total finances and the money that its government needed to run. South Korea also kept its currency highly overvalued, a typical occurrence in third world countries. This provided little incentives for Korean firms to export and also provided the local population with cheap imported products that were subsidized by the government. At the same time, government corruption and cronyism lead to government officials channeling aid dollars to themselves, by providing import licenses to their preferred businessmen.
It was national security concerns that precipitated a shift in the Korean economy, as its military government did not want to stay behind North Korea in industrialization. South Korea rapidly industrialized its economy in the 1960s and the 1970s and was significantly helped by Japan which provided high end technology to the country. At the same time, the politics of the Cold War era began to emerge, and America felt that it needed to expand its diplomatic presence in Asia by establishing ties with China and withdrawing forces from Vietnam. The Vietnam War was also a boon for South Korea as it contributed to the war effort and its companies won lucrative construction projects, but the American pivot created urgency to diversify itself away from the superpower.
Since then, South Korea has diversified away from a government planned economy to one that is now dominated by market forces. And its economic transformation, one which also led it to weather the Great Recession of 2008, has also produced some of the biggest companies in the world. South Korean firms are among the most advanced companies in the world, and they are distinct when it comes to the scope of their operations.
Korea’s largest company in terms of market capitalization is one firm that we have all heard of. If you haven’t figured it out, it’s the Samsung Group – a business behemoth with an unimaginable number of businesses under its umbrella. Samsung has eighty different businesses, and these range from making semiconductors to televisions, washing machines, medicines, smartphones, heavy machinery, and a lot more. Apart from Samsung, other large Korean firms are Hyundai (which rose after winning American contracts during the Vietnam War), LG (another well known consumer electronics firm), and Kia.
However, while South Korea has rapidly risen to become a global economic power, it still isn’t immune from the recent turbulence in the global economy. Soaring inflation all over the world has pushed central banks to raise interest rates to extremely high levels in a short time period. This stresses credit conditions and according to the International Monetary Fund (IMF) places Korean firms at risk if the high rates persist. The problems are further exacerbated by the fact that South Korea is one of the few countries in the world where non financial firms also have high debt levels.
Additionally, Korean economic growth is also slowing down with the country reporting a seventh consecutive month of export drop in April 2023. This is primarily due to Chinese economic woes, as the world’s largest economy in purchasing power parity terms continues to struggle to return to growth after reopening its economy in December. This has forced the Korean government to take action, with the Korean government now slated to provide $17 billion in loans to exporters to stimulate their business growth, especially since July marked the tenth consecutive month of export drop in the country. At the same time, the government is also raising financing for its own purposes, with South Korea slated to issue Yen dominated Samurai bonds worth 20 billion Yen for the first time.
As to the on ground situation for Korean firms, here’s what KB Financial Group Inc. (NYSE:KB)’s management had to say during the firm’s second quarter of 2023 earnings conference call:
But considering the recent interest rate trend and macro backdrop, we expect NIM to – and to face downward pressure during the second half. And as we continue to stick to conservative lending stance in light of internal and external uncertainties, loan growth will inevitably be constrained with ’23 second half interest income growth suppressed. KBFG will pursue growth around high-quality assets to secure sustainable interest income basis and by continuing our efforts around business diversification, we will drive growth of nonbank and noninterest business, while corporate-wide cost control will help fuel steady and solid bottom line growth during the year. Also, in order to bring sustainable growth, KBFG has been steadfast towards inclusive financing, leading the efforts and making social contribution, pursuing co-prosperity with the local communities, and we’ll continue to find ways to solve society’s issues and expand our role in practicing social responsibility that define sustainable transformation.
In the meanwhile, with prolonged global economic recession, domestic economy is also experiencing a slump and higher interest rate which has heightened concern over deepening credit risk. As such, KBFG is focused on preemptive risk management from a more conservative perspective. As a result, first half group’s PCL, including Q1 general provisioning increased significantly versus last year, but we expect this will alleviate the impact from economic shocks going forward and will be a positive factor in removing business uncertainties and reducing profit volatilities driven by credit loss. For your information, group and bank’s NPL coverage ratio as of end of June were 201% and 254%, respectively, attesting to industry’s highest loss absorption capacity against potential losses.
With these details in mind, let’s take a look at some Korean stocks that trade on U.S. exchanges.
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Our Method0logy
To compile our list of Korean stocks listed on U.S. exchanges, we collected all South Korean firms whose shares trade on either the NASDAQ or NYSE. The firms are ranked according to their market capitalization and the list is not all inclusive.
10 Korean Stocks Listed in the U.S.
1. POSCO Holdings Inc. (NYSE:PKX)
Latest Market Capitalization: $31.23 billion
POSCO Holdings Inc. (NYSE:PKX) is a steel company headquartered in Pohang, South Korea. The firm sells steel and iron products to different industries. While the shares have a $17 upside based on the average share price target, the stock is rated Buy on average.
Insider Monkey’s Q2 2023 survey of 910 hedge funds revealed that seven had held a stake in POSCO Holdings Inc. (NYSE:PKX). Its shares jumped by more than 24% in July after the firm reported $1 billion in operating income for its latest quarters and laid out a plan to diversify its business away from steel manufacturing and focus on electric vehicle battery manufacturing.
2. KB Financial Group Inc. (NYSE:KB)
Latest Market Capitalization: $14.69 billion
KB Financial Group Inc. (NYSE:KB) is a South Korean regional bank headquartered in Seoul, South Korea. It provides a wide variety of banking products and services, including loans, brokerage, and insurance services.
During this year’s second quarter, 11 of the 910 hedge funds surveyed by Insider Monkey had invested in the bank. KB Financial Group Inc. (NYSE:KB)’s largest shareholder among these is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital through a stake worth $41.3 million.
3. Shinhan Financial Group Co., Ltd. (NYSE:SHG)
Latest Market Capitalization: $13.32 billion
Shinhan Financial Group Co., Ltd. (NYSE:SHG) is another regional bank and one that is also headquartered in South Korea’s capital, Seoul. Few analysts cover its shares, and the bank’s second quarter net income stood at $941 million.
As of June 2023, six of the 910 hedge funds polled by Insider Monkey had bought and invested in Shinhan Financial Group Co., Ltd. (NYSE:SHG)’s shares. Richard S. Pzena’s Pzena Investment Management is the biggest hedge fund shareholder, with a $22 million investment.
4. Korea Electric Power Corporation (NYSE:KEP)
Latest Market Capitalization: $8.74 billion
Korea Electric Power Corporation (NYSE:KEP), as the name suggests, is a power company. It is one of the largest power companies in the world, and one of the oldest on our list since it was set up in 1898.
After digging through 910 hedge funds for their June quarter of 2023 shareholdings, Insider Monkey discovered that six had held a stake in the company. Korea Electric Power Corporation (NYSE:KEP)’s largest investor in our database is David Iben’s Kopernik Global Investors since it owns a $12.2 million stake.
5. SK Telecom Co., Ltd. (NYSE:SKM)
Latest Market Capitalization: $7.72 billion
SK Telecom Co., Ltd. (NYSE:SKM) is one of the largest telecommunications companies in South Korea. The firm set up a global telecommunications alliance for focusing on artificial intelligence in July.
Four of the 910 hedge funds part of Insider Monkey’s Q2 2023 database had invested in SK Telecom Co., Ltd. (NYSE:SKM). Out of these, the biggest stakeholder is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital with an investment worth $24 million.
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Disclosure: None. 10 Korean Stocks Listed in the U.S. is originally published on Insider Monkey.