Markets Discover Korea Too

Markets Discover Korea Too

July 14, 2005

The other big number on my screen today is Korea. The Korean exchange traded fund is EWY, it is up 2.3% today, with Hong Kong (EWH), and Pacific Rim ex-Japan (EPP), an ETF owning the markets of Australia, New Zealand, Singapore, and Hong Kong. Australia and New Zeealand are supplying resources to China (coal is the new oil); Singapore and Hong Kong are windows China is using to import capital as well as regional centers of advanced technical education.

Korea is interesting for several reasons. First, you can throw a rock from Korea to the high-tech manufacturing plants in China (can’t wait til Wall Street discovers that Korea is located close to China). Second, Kiorea is kicking butt on technology investments, our butt actually. They have an state-run R&D agency called the Electronics and Telecommunications Research Institute (ETRI) in Daejon manned with 1500 engineers developing high-speed communications devices for Samsung, LG, SK Telecom, and other Korean companies to bring to market. ETRI has an annual budget of $345 million.

And the Korean government has a program called IT837 (stands for 8 services, 3 infrastructure projects, 9 new devices) that you are going to be hearing about. Projects include a telecom network 50 times faster than what we call broadband, RFID tracking devices to track everything from military grenades to imported beef products, and a wireless broadband standard that will allow commuters to stay to computer networks even while travelling on high-speed trains.

And by the way, China will sell more than 300 million cell phones this year to its own citizens–almost all of them have Samsung innards.

I own EWY, but not as much as I wish I did. The stock is up 38% since last September.


John Rutledge

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