We recently compiled a list of the 10 Best Asian Stocks to Invest in According to Analysts. In this article, we are going to take a look at where Shinhan Financial Group Co., Ltd. (NYSE:SHG) stands against other best Asian stocks to invest in according to analysts.
Asian markets traded mixed on Friday, January 24 as investors digested a series of economic reports from China, which showed robust growth in the fourth quarter of 2024. The country’s economy expanded by 5.4%, surpassing expectations and contributing to a full-year growth rate of 5%, according to China’s National Bureau of Statistics. Key economic indicators from China were particularly encouraging. Retail sales in December jumped 3.7% year-on-year, exceeding the forecast of 3.5%. Industrial output also expanded 6.2% year-on-year, higher than the anticipated 5.4%. This positive economic data was a significant driver of market sentiment across the region and provided a strong tailwind for market performance, especially in markets closely tied to China’s economic health.
Japan’s Nikkei 225, however, ended the day down 0.31% at 38,451.46, while the Topix lost 0.33% to 2,679.42. Despite the positive economic data from China, Japanese markets were influenced by broader global factors and domestic economic concerns. South Korea’s Kospi closed slightly lower, falling 0.16% to 2,523.55, while the tech-focused Kosdaq edged up 0.06% to 724.69.
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In an interview with CNBC on January 15, David Herro, Partner and Portfolio Manager at Harris Associates, discussed the potential opportunities in international markets. Herro noted that while U.S. stocks have been the center of attention and have seen significant gains over the past decade, international equities, offer attractive investment opportunities due to their undervalued nature and growth potential.
Herro emphasized that the valuation differential between U.S. and international stocks has become quite large, creating pockets of opportunity for investors. Many international stocks are trading at attractive multiples, with earnings ratios of about 10 times, and these valuations are based on projected earnings growth of around 10%. This combination of low multiples and reasonable growth expectations makes international equities almost irresistible for investors.
Herro pointed out that the growth rates of international companies are not solely dependent on their home markets but are influenced by their global operations. For instance, many Asian companies, particularly in sectors such as technology, manufacturing, and consumer goods, have a significant presence in global markets. This global diversification can provide robust growth opportunities, even in the face of local economic challenges. He also highlighted the importance of considering the fundamentals of individual companies rather than just the macroeconomic conditions of their home countries. Many companies, despite operating in regions with varying economic conditions, have strong business models and are positioned to benefit from global trends such as digitalization, urbanization, and rising consumer spending.
As investors seek opportunities beyond the U.S., Asian markets stand out as promising destinations for long-term growth.
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Our Methodology
To compile our list of the 10 best Asian stocks to invest in according to analysts, we used Finviz and Yahoo stock screeners to identify the 30 largest Asian companies. From that list, we narrowed our choices to the 10 companies that analysts see the most upside to. We also included their stock price as of January 27 and their hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of analysts’ average upside potential as of January 27.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Shinhan Financial Group Co., Ltd. (NYSE:SHG)
Upside Potential: 48.52%
Stock Price as of January 27: $35.22
Number of Hedge Fund Holdings: 8
Shinhan Financial Group Co., Ltd. (NYSE:SHG), headquartered in Seoul, South Korea, is one of the country’s largest financial conglomerates. The group offers a comprehensive range of financial services, including banking, investment, insurance, and asset management. Shinhan Bank, its flagship subsidiary, serves a diverse clientele, from individual customers to large corporations.
Shinhan Financial Group Co., Ltd. (NYSE:SHG) is focusing on qualitative growth, with an emphasis on return on equity (ROE) and return on assets (ROA). The company is targeting an ROE of 13% for 2025 and is working to optimize its asset allocation and resource allocation to achieve this goal. This includes a focus on high-growth areas such as corporate lending and digital banking, as well as efforts to improve operational efficiency and reduce costs.
Shinhan Financial Group Co., Ltd. (NYSE:SHG) is also focused on managing its risk-weighted assets (RWA) and maintaining a strong capital position. The company is targeting RWA growth of 5% for 2025 and is working to strengthen its RWA budget system and improve data alignment and integrity. This includes investments in digital transformation and data analytics, as well as efforts to enhance its risk management capabilities and improve operational efficiency.
Furthermore, Shinhan Financial Group Co., Ltd. (NYSE:SHG) has announced a comprehensive plan to enhance its enterprise value. This program aims to achieve a total shareholder return (TSR) of 50% by 2027, with a focus on increasing dividend payouts and share buybacks. The company has already made significant progress in this area, with a share buyback program of $276.37 million (KRW 400 billion) announced in the third quarter of 2024, and plans to continue this program in the future.
Overall SHG ranks 1st on our list of the best Asian stocks to invest in according to analysts. While we acknowledge the potential of SHG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
