Greg- A Cautionary Note-
Good to hear I'm not alone in thinking KEP represents good value. I'm not a big fan of utilities or government owned entities in general, but I'm not averse to making a safe buck.
There was an interesting short article by a John Burton in the Financial Times last Friday. Perhaps others may have more details, but apparently Booz Allen released a comprehensive study of the S. Korean economy in Seoul late last week. It was a very harsh critique of S. Korean government economic policy which warned that Seoul must quickly liberalize or risk "relegation to the ranks of the might have been economies" and that "the curtain is coming down on the Korean economic miracle of the past three decades" [all quotes in this post come from the study itself].
Burton reported the study said that SK is rapidly losing strength due to excessive government intervention and a "dramatic managerical and technology knowledge gap" with other advanced countries. Consequently, it is "caught between China's low costs and Japan's technical excellence." Despite rhetoric about economic reforms, "there is currently a stalemate of many words without deeds" due to fears that liberalization would lead to disruptive changes, including job losses as uncompetitive businesses are driven to the wall. "The longer Korea fends off a correction, the worse the problem will ultimately be."
That bit about being caught between China's low costs (if that is indeed true- China has low wages, but I don't know that translates into low costs) and Japan's technical and managerical superiority is a bit chilling. So, for that matter, was Richard Samuelson's comment [quoted in my post #7 or #8] that if SK absorbs NK, then you probably don't want to own any Korean equities. Again, that's not obvious to me- unlike Germany, South Korea does not have a burdensome welfare state- but he knows more about it than I do. Unfortunately, in the TWST interview, he did not give his reasons for that opinion.
If anyone can give more information about the Booz-Allen report, I would certainly hope he or she would post it here.
Regards,
Larry |
