Ok, so following the latest news out of the Korean peninsula, where Kim is apparently using the cover of darkness to move an ICBM fitted to a wheelbarrow to a launch site in preparation for another provocation ahead of (or on) founding day, South Korean shares fell again.
And although the Tuesday decline was minuscule, the benchmark has now fallen for four straight sessions:
As you can see, that’s the longest stretch of consecutive declines since “fire and fury.”
Bloomberg’s Kyoungwha Kim is out on Tuesday warning investors not to forget about cheap valuations and swift earnings growth, something we mentioned on Monday.
“South Korea’s shares are trading at a record discount to emerging-market peers and that has me thinking a turnaround must be on the way [and] the longer that rally is delayed, the steeper it will be,” Kim writes, adding that “the Kospi‘s P/E ratio has been getting lower and lower relative to the ratio on the MSCI EM Index and the decline is not only because prices are being held down by that, but also because earnings are climbing, so how can you seriously not be bullish about South Korean shares long term?”
Kim’s point is duly noted, but the answer to the question posed in bold above is self-evident.
And as far as the near-term, Morgan Stanley thinks it’s probably best to stay away – or at least in credit.
“If investors want to add risk in Asia credit, they should wait until early October,” the bank’s Kelvin Pang writes, in a new note, adding that “September is littered with U.S. political and monetary risk events as Congress debates raising the debt ceiling, passing the budget and embarking on tax reforms while the Fed will likely announce balance-sheet reduction.” And besides, “Asia credit hasn’t cheapened much despite recent selloffs triggered by N.Korea tensions.”
Also, note that Kospi volatility was up again today: