Investing "Gangnam Style"

Bubbly pop

Oct 2nd 2012, 10:54 by D.T. | SEOUL

A MID-SIZED sized Korean semiconductor firm named DI makes products with distinctly un-sexy names like “Monitoring Burn-in Tester” and “Wafer Test Board”. It has lost money in each of the past four quarters. And there have been no changes to its fundamentals that might explain why its share price should shoot up from 2,000 to 5,700 won (from $1.80 to $5.12) in the space of just three weeks—including another 15% gain today.

But DI’s chairman and main shareholder, Park Won-ho is no ordinary mortal. He is the father of Park Jae-sang, better known as PSY (as in “psycho”). “Gangnam Style”, if you haven’t heard, is now number one in Britain’s pop charts and number two in America. Local retail investors—referred with the derogatory gaemi-deul (“ants”) by professionals—are piling into DI shares because of it.

Quite how they expect the horse-dancing YouTube phenomenon of 2012 to help DI sell more of its Wafer Test Boards is a mystery. But convoluted investor logic is of course not a new thing. DI is merely the latest example of Korea’s “theme stock”—the local equivalent of the 17th-century Dutch tulip, Pets.com and the like going into 1999, or the Chinese walnut.

One of the most common themes has been the marriage stock. When the son or daughter of a company owner weds a chaebol family member, an unusually generous wedding gift may arrive. Back in 2009, shares in a firm named Bolak ran up from 2,000 won to 9,000 won after the owner’s daughter married into the family behind LG. The effects were short-lived: Bolak shares now fetch a more earthly 3,110 won.

The upcoming presidential election has created another subcategory of theme stocks. Following Ahn Chul-soo’s emergence as a political force about a year ago, shares in his company, Ahnlab, ran up from about 20,000 won each to a peak of 167,200 won. Since he declared himself as a candidate, Ahnlab has been crashing: now each share fetches 82,000 won. Ahnlab’s price-earnings ratio is still 87, mind you.

There are worse cases. Excitable ants bid up shares in Daehyun, a clothing firm, by 350% last summer, due to an apparent link with another presidential contender, Moon Jae-in. A widely-circulated photograph of a man who looked like Daehyun’s CEO seated smiling with Mr Moon was all they needed.

The man in the photo of course was in fact not even the CEO in question. The Financial Services Commission (FSC believes that the photograph and accompanying fib was deliberately spread by an individual pump-and-dump artist who ended up making 1.1 billion won (around $1m) from the jump in Daehyun’s shares.

The presidential race is just getting into full swing. Despite the FSC’s warnings, it is likely that political theme-stock mania will reach new heights in the coming weeks. This correspondent interviewed Moon Jae-in back in August and, unlike Daehyun’s CEO, actually had his picture taken with him. Should you read of an English journalist in South Korea quitting his day job and striking it rich between now and the election, you’ll know what happened.

Bubbly pop

Oct 12th 2012, 08:49

South Korea’s entrepreneur and enterprises is focused more than Japan’s and China’s owing to the better vision (than Japan’s) and the more stably profitable, or less risky (than China’s). South Korea, predictable (if there is no war around Panmunjom), is scheduled to reach the 10th-largest economy while Japan declines from 2nd to 16th economy of the world in 2040s.

Besides, there are 13 South Korea’s enterprises entering the Forbes 500 lists, compared to China’s 72, Japan’s 68 and Taiwan’s 6. During the recent 10-year period, South Korean annual income, on average, get more USD. 1000 but Taiwan’s only rises USD. 100 and Taiwan’s GDP begins to seriously decreases in the 10-year future (Taiwan is the only declining economy in Asia). Thus, although South Korea’s 2012 growth is just 3% (China’s 8.1%, Japan’s 1.2% and Taiwan’s -0.5%), the so-so number, investing more in South Korea than any other Asian nation is worth experiencing the different life from European debt with FTA or the unification of East Asian 3-nation economy.

South Korea expresses various kinds of charisma, from politics to entertainment, although there is still room for promotion to mature level of advanced nation with regard to technique and real opening culture. Unlike some pessimist, I intend to touch Korean history, politics and economy with some surprise and for my work with Pyongyang’s Kim dynasty. Sometimes, Korean culture is strange as some tragic case appears. From Daewoo’s too aggressive power struggle to this week’s attempted suicide of K-pop King, Kim Jang-hoon, there is indeed some question behind Korean prosperity.

Because the speed of progress is too high, some paradox occurs owing to the lack of co-ordination. Take the Economist’s discussion to continue. This Mr. Kim is a close friend of PSY for several years, but attempt to suicide for PSY’s offensive copyright in “Gangnam Style”’s Horsey Dance. PSY experienced a lost youth period of bad-drinking and drop of compulsory military. By contrast, several years ago, PSY began to debut his entertainment career and cooperate with Kim. Last month, PSY broke a record of Europe and American foreigners, including iTunes and Youtube for this “Gangnam Style”. In addition to the Economist’s Youtube video, the version of “New York” connoting “dress classy” with PSY’s unique “right-left” footstep has the world advance the impression of Korea. PSY plays a sarcastic instant noodle of Korean richer in Gangnam, coincidentally, claiming the next era of Korean-style capitalism, such as Samsung that win the 9th rank of global brand and Hyundai’s Chung Mong-koo who becomes the 2nd influential tycoon second to Warren Buffett in the world.

“Gangnam” is the most prosperous business region in Seoul, rallying numerous conglomerates or affiliation. This suicide case can reflect some worthy of showing off as well as some fraud or face of hypocrisy. After Syngman Rhee’s ruling, politics has strong relations with economics, with their unique view of party politics. In reality, the development of Asian nation and the evolution of Asian politics depend on the entrepreneurs and finance, or called chaebol. There is no exception of South Korea - even the reason why these leaders hold or lose power - there is just a few difference like Japan’s Ramen, South Korea’s noodle of sauce-cabbage pot, China’s beef noodle and moreover Shabu-shabu, full of Sino-Japanese style.

South Korean ideology of patriotism sometimes annoy Asian nation but, compared to Japan’s - with guilty of world war two’s problem, Korean concerned is keenly touched by a pure heart. As a whole, South Korean intensively interior unity has them keep well-organized society, also having them resemble a conglomerate - moreover, a kind of vocation is like a department or branch of a company. Either Park Geun-hye or Ahn Chul-soo (Moon Jae-in) may continue the respect for chaebol. For the better image of Ms. Parks father Park Chung-hee as River Han miracle, Ms. Park is inclined to be elected as next president after Lee Myung-bak, the former Hyundai’s CEO and a humble wordsmith. As a result, Lee cannot be re-elected as president but may help ensure South Korea’s stable party politics.

Well, Korean culture is already integrated into my interest in my mind. While writing this article, I launch Kmplayer with my Sony invincible laptop listening to the collection of Korean drama, or see the history of Yi’s Chosen to find charming Korea. Like Sung Kyun Kwan, the origin of Korean character, the fresh idea always has me lounge. Yeah, at times for my private affair, I contact Jin Mei-lin, a relative of LG’s Kim family and Gu Hye-Seon, the beauty of Sung Kyun Kwan University. Korea move forward in the world as Seoul continue its new dynasty, or a renaissance.

    Recommended

    3

    Report

    Permalink

這篇是從南韓首都首爾市的江南區內，從經濟學者雜誌所報的當時韓國經濟發達狀況，筆者作一番討論。彼時「江南Style」蔚為風尚，南韓的經濟和流行文化的話題一樣地熱絡。在當時預估南韓在五年內的年人均GDP可達美金30,000元以上。打富比士前五百大打錯了，是財星雜誌，台灣當時有6間，南韓13間。筆者因民族情緒比較起當年再之前的近十年來，年人均多一百美金和一千多美金的悲哀。三星和現代集團在全球的工業表現及財力均十分搶眼，當時幾乎取代日本的經濟和工業在世界上的地位。

南韓的政黨政治在此次選舉漸趨成熟。這兩個勢力各推一名候選人，並且在朴瑾惠總統任內，發生看病插隊醜聞後，原來在野的文在寅接任了總統。韓國傳統上的政企關係還不錯，韓國的經濟從朴的父親朴正熙將軍開始就建立於政黨、政治人物、行政部門和「CHAEBOL」的關係。但在朴任上，執政黨的確開始重視公共利益及法治社會的基礎，陸續清查及查扣財團不法所得，減少財團壟斷經濟及降低員工不良勞洞環境。

South Koreas presidential race

Sorry for the dictatorship part

Sep 28th 2012, 0:27 by D.T. | SEOUL

“I UNDERSTAND that the end does not justify the means…I apologise to the victims hurt by my father’s dictatorial rule in this regard.” These were the words offered by a leading hopeful for the presidency, Park Geun-hye, on September 25th. She was taking the bull by the horns, addressing what her opponents and other critics have been trying to make a defining issue in the election.

Ms Park’s father, Park Chung-hee, was the general who overthrew a freely elected government in 1961. General Park was not above imprisoning and torturing his opponents, especially during the days of the infamous Yushin constitution, which lasted from 1972 until his assassination in 1979. However Mr Park was also the architect of the Korean model for development, which helped lift the nation out of poverty.

The development-orientated state concentrated resources in the hands of an elite club of conglomerates, the chaebol. These still dominate the Korean economy. These odd, amalgamated firms have become export titans, and a source of national pride. But they also have an unnerving habit of using their power to gain unfair advantage at home. What to do about this situation has itself become a heated issue in the election, even more so than that of the politically oppressive side of the Park legacy. Whichever the topic, in some way all political roads in South Korea lead back ultimately to Park Chung-hee.

The senior Park’s one-time opponents—such as Moon Jae-in, a political prisoner in 1975 but today another candidate running for the presidency—had long called on Ms Park to acknowledge the darker aspects of her father’s rule. On previous occasions she had said that the 1961 coup presented the country with “the best choice” at the time, and that its judgment should be left to history.

The speech was well-received by both Mr Moon and the other centre-left candidate in the race, Ahn Chul-soo, who is running as an independent. Not everyone concurred, though. Relatives of eight activists who were executed in 1975—after being convicted, falsely, of breaking a national-security law—retorted that Ms Park is merely trying to better her odds of winning the election.

According to the Korean press, Ms Park’s chances of becoming president have recently taken a drastic tumble. In all likelihood, either Mr Ahn or Mr Moon will eventually bow out and support the other. In either of the resulting two-way scenarios, opinion polls show that Ms Park would finish second. One poll even has Mr Ahn coming close to the margin of error for victory in a three-way fight. Uncharacteristic slip-ups by Ms Park’s press team have not helped her. Headlines now blare that hers is a candidacy in “crisis”.

Ms Park however is known as the “Queen of Elections” and she did not earn her nickname for nothing. At one point not so long ago everyone had assumed that her party would lose control of the national assembly in this April’s parliamentary elections. But her rapid move to the political centre—combined with rebranding that gave her party a new name and a new logo and deposed a bunch of its unpopular greybeards—convinced the electorate to let the rechristened Saenuri Party hold on to power.

What looks like a pair of scandals flung at Mr Ahn might also improve Ms Park’s standing. On September 28th allegations surfaced that he fiddled with the tax bill attached to a property purchase of his; and, separately, that he may have plagiarised part of an academic paper. If these stick, Mr Ahn has a long way to fall: his popularity is owed in large part to his hitherto saintly reputation.

Ms Park is also highly popular with the over-60 crowd, who tend to recall her father fondly. In April’s election, members of this group was 1.8 times more likely to vote than citizens in their 20s. The 20-somethings tend to prefer Ahn Chul-soo—but there is a difference between liking a candidate and actually turning out to vote for him. The reactions to her apology may be lukewarm, but no one should doubt Ms Park’s ability to make a strong showing—especially on election day itself.

(Picture credit: Saenuri Party)