Trip to Seoul

We were in Seoul in March to meet with several CEO's and CFO's of some of the major quoted South Korean companies. South Korea has been and continues to be a rich source of world class companies.

Hard to believe, but South Korea is now the world's seventh largest exporter and a global force in industries from automobiles (Hyundai, KIA) and electronics (Samsung) and ran a current account surplus of US$26bn in 2011, or 2.5% of GDP.

We met with bosses of largest internet portal business NHN, national telecoms operator SK Telecom, construction machinery giant Doosan Infracore (owner of Bobcat), as well as major financial groups KB Financial and Samsung Life and Korea Development Bank, national refiner S-OIL, as well as meeting up with managers from the National Pensions Service.

Emblematic of how far the country has come in such short time is the forcing into bankruptcy of Japanese semiconductor supplier Elpida such has been the strength of the Koreans in the Dram market as well as Korea National Oil's bid for El Paso's upstream assets in the US. It's not all a bed of roses however.

The on-going stand-off between North and South remains a feature of daily life. The two countries are still technically at war (the 1953 agreement to end hostilities is officially classified as a ceasefire), while the recent death of Kim Jong Il and his replacement by son Kim Jong Un has increased fears of instability on the Korean peninsula.

Stephen Watson

Indeed while we were there Seoul hosted a regional security conference hosted by the South Korean Government and attracting heads of governments from around the world, including US President Barrack Obama.

Ultimately, South Korea's success has made it the largest economy in Asia ex Japan after China, impressive indeed for a population of 49 million people.

The stock market has reflected this, the KOSPI index closing Q1 2012 at 2015, close to an all-time high. A rating of 20 times 2012 earnings however makes us guarded in the short term, even while positive drivers in the longer term we believe will underpin the market