Korean Stock Trading

[Packer16]

Does anyone know of a broker that can buy/sell Korean securities as well as US and European securities?  I looked at both IB and Fidelity and they don't appear to be able to Korean markets per their website.

 

Packer

[constructive]

I think your best bet is Etrade Korea. Foreigners can open accounts, and they offer access to Korea, Japan, Hong Kong and the US.

[JBird]

Fidelity is able to do broker assisted trades on the Korean market. For the trade I inquired about, there was an $82 commission plus the Korean broker takes 10 bps on the buy side, and ~20bps on the sell side.

[constructive]

What are you interested in?

 

Li Lu has been pitching Korean preferred shares, in particular Samsung, Hyundai and A-1 Pacific:

http://blogs.cfainstitute.org/insideinvesting/2013/05/14/light-and-heat-at-the-ira-sohn-conference/

 

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.ksri.org%2Fcommon%2Fdownloadw.asp%3Ffid%3D4535%26fgu%3D002001%26fty%3D004003&ei=HR4IUsP6MoGwyQH8lYD4Dw&usg=AFQjCNH0rp-zyr6YLYHT_8J1DlwNfGhA_A&sig2=8XqBMcjOl6MWRt-ksyX1RA&bvm=bv.50500085,d.aWc

 

Hyundai Marine and Fire and Hanwha Insurance are also on my watchlist. I hadn't noticed that IB only offered Korean futures, not stocks.

[Packer16]

I am looking at the Hyundai preferreds as they appear to have a combination of quality and cheap price.  I wasn't able to find anything about A-1 Pacific.  Is it the same as Amore Pacific?  TIA

 

Packer.

[constructive]

I don't know, saw it second hand. AmorePacific seems like a good guess.

[matjone]

where do you go to get quotes for these?  The only quote I found was on morningstar and it's a 4.5% preferred quoted at 105.  Thanks

[Packer16]

If you go to Yahoo Finance the Hyundai pfd is 005385.KS

 

Packer

[shalab]

Real time quotes here:

 

http://worldwide.hyundai.com/WW/Corporate/InvestorRelations/StockInformation/RealTimeQuotes/RealTimeQuotes/TypeIpref/index.html

 

I think it goes by the ticker: HYMTF

 

Exchange rates - USD vs South Korean Won:

 

http://www.bloomberg.com/quote/USDKRW:CUR

[Rabbitisrich]

What are you interested in?

 

Li Lu has been pitching Korean preferred shares, in particular Samsung, Hyundai and A-1 Pacific:

http://blogs.cfainstitute.org/insideinvesting/2013/05/14/light-and-heat-at-the-ira-sohn-conference/

 

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.ksri.org%2Fcommon%2Fdownloadw.asp%3Ffid%3D4535%26fgu%3D002001%26fty%3D004003&ei=HR4IUsP6MoGwyQH8lYD4Dw&usg=AFQjCNH0rp-zyr6YLYHT_8J1DlwNfGhA_A&sig2=8XqBMcjOl6MWRt-ksyX1RA&bvm=bv.50500085,d.aWc

 

Hyundai Marine and Fire and Hanwha Insurance are also on my watchlist. I hadn't noticed that IB only offered Korean futures, not stocks.

 

Do you know which organization under the Hyundai banner he was referring to?

[Poor Charlie]

Grant's had a great writeup on the Korean preferred trade last fall.  For PAs they mentioned Boom Securities Hong Kong (sub of Monex Japan).  They also suggested talking with Kyung Suk Choi (Daewoo Securities). 

[cogitator99]

S. Korea is an interesting place to invest, it looks like. 2013 P/E 10x, with all sorts of cheap Graham-like bargains.

 

If you have a private bank they can probably post the trades for you, but it won't come cheap. 

[Hubris]

I guess if ur priming through JPM (Neovest) u could post these trades quite easily. If you do looks at P/E your effectively buying these businesses at P/E 3-6

[JBird]

I have had a comical time researching these Hyundai preferred's. Hyundai doesn't have investor relations so far as I can tell. So I've called every corporate office on this continent asking about the economic rights of the preferred and the call features. No one knows anything. One guy had the naivety to refer me to a local car dealer.

 

It appears from the statements that the preferred have the same economic rights as the common, plus the added dividend. Does anyone have info to the contrary?

[yitech]

If by economic rights, you meant equal share of earnings per share, I believe it's 'yes'. However, preferred share holders cannot vote. The ability to vote is not much of a big deal though since the founder family have most of the voting rights anyways. Preferred shares are equity, but most companies mask it as debt by calculating EPS only for the commons below the line. Earnings for preferred are treated as preferred interest expenses above the line. So, there is some confusion whether it's debt or equity.

 

I know they do calculate EPS for preferred shares for Samsung, but not Hyundai in the annual reports. Moving to IFRS from Korean GAAP may help a bit as well. In addition, preferred shares are much less liquid than common and treated as more inferior by trader-minded Koreans. Also, companies rarely buy back stocks to enhance shareholder values. Unless, corporate governance and sensible accounting guidelines strengthen, the large discount may persist indefinitely.

[Packer16]

Amore Group has announced a buyback of common and preferred shares but I do have to admit it is the exception.

 

Packer

[cogitator99]

Korea is definitely interesting given valuations. Any Koreans on here that care to share some ideas?

[matjone]

I was just looking around on ft.com - cogitator99 seems to be right about Grahamian bargains. 

 

Kyungin Electronics Co LtdA009140:KSC

Samil EnterpriseA002290:KOE

Samsung Climate Control Co LtdA006660:KSC

Yooshin Engineering CorpA054930:KOE

 

I wish I could get access to this market.  I might just have to pay the 80 bucks on fidelity and buy a few of these.

[JBird]

The following Korean companies have a two-class share structure:

 

Hyundai Motor. Common: KRX:005380. Preferred KRX:005385.

Daelim Industrial. Common: KRX:000210. Preferred: KRX:000215.

Nexen Tire. Common: KRX:002350. Preferred: KRX:002355.

 

The common and preferred shares have equal rights to company profits. In each case, the preferred is entitled to an additional dividend above the common stock. The preferred shares do not have voting rights.

 

The preferred shares of Hyundai trade at 4 times earnings, a 50% discount to the common.

The preferred shares of Daelim trade at 2.8 times earnings, a 68% discount to the common.

The preferred shares of Nexen Tire trade at 3.7 times earnings, a 74% discount to the common.

 

These are large-cap companies. The common stock market cap of Hyundai is $50 billion USD. Daelim is $3 billion. Nexen is $1.4 billion.

[Guest hellsten]

The following Korean companies have a two-class share structure:

 

Hyundai Motor. Common: KRX:005380. Preferred KRX:005385.

Daelim Industrial. Common: KRX:000210. Preferred: KRX:000215.

Nexen Tire. Common: KRX:002350. Preferred: KRX:002355.

 

The common and preferred shares have equal rights to company profits. In each case, the preferred is entitled to an additional dividend above the common stock. The preferred shares do not have voting rights.

 

The preferred shares of Hyundai trade at 4 times earnings, a 50% to the common.

The preferred shares of Daelim trade at 2.8 times earnings, a 68% discount to the common.

The preferred shares of Nexen Tire trade at 3.7 times earnings, a 74% discount to the common.

 

These are large-cap companies. The common stock market cap of Hyundai is $50 billion USD. Daelim is $3 billion. Nexen is $1.4 billion.

 

Thank you! I smell see a bargain, but IB doesn't have Korean stocks  >:(

[JBird]

I contacted 10 brokers and the only one I found with access to the South Korean exchange is Fidelity. They charge an $80 commission buy/sell. Plus there's a 10bps commission for the Korean broker on the buy side and 20bps on the sell side.

[Hielko]

What about LON:WKOF?

 

The Company is geographically focused on South Korean companies, specifically, the Company intends to invest primarily in listed preferred shares issued by companies incorporated in South Korea, which in many cases are currently trading at a discount to the corresponding common shares of the same companies. The Investment Manager intends to assemble a portfolio of Korean preferred shares that it believes are undervalued and could appreciate based on criteria it selects.

Does trade at a small premium though...

[matjone]

This is the email I got back when I emailed etrade korea.  Sorry the table didn't come through but it looks like for most of us we'd be paying about a half percent fee for each buy or sell transaction.

 

 

Q1. About Opening Account

A1. It is very complicated that foreigner not living in Korea registers “Certificate of Investment Registration” and opens account for investing Korean Stocks. And the process costs about a month (or over). The documents should also be delivered by international courier service. Thus, it is important that you are sure you have a strong passion and enough money to invest.

 

 

Q2. About Fee

A2. To serve you to resister “CIR” and to open account as your Standing Proxy, we requests that you pay us $100 as fee. When the process is going, you should transfer money into our company’s account.

 

Q3. About Trading

A3. For foreigner not living in Korea, we don’t offer on-line trading service.(We don't have HTS for Retail in English now.) Thus, your account is only made of off-line trading service. Because Etrade Korea, as standing proxy, guarantees your fair trading, and reports your trading records to ‘Financial Supervisory Service’ regularly. (Contract for Standing Proxy is a kind of RISK of US)

 

Here comes ‘Fee’ Table for Trading.

 

Position

Volume

Fee

Buy

Under 50M Won

0.48%

50M ~ 0.3B Won

0.45%

Above 0.3B Won

0.38%

Sell

Under 50M Won

0.48%+0.3% Tax

50M ~ 0.3B Won

0.45%+0.3% Tax

Above 0.3B Won

0.38%+0.3% Tax

Tax (except 0.3% Trading Tax, for Gaining Interest and Dividends etc.) is following Your Asked Country.

 

Q4. About Transferring and Trading MONEY

A4. After opening account, we suggest you to transfer over 20~30 thousands in one time at least because of Efficiency and Productivity. To assist you for converting US dollar as Korean Won, I have to go to bank in Yeouido (when we open cash account in Etrade Korea, we also open bank account.) on Business Time.

 

Then, I ask you considering my position. Based yesterday, I manage about 20 million Dollars which is my client’s money. As your money is important, my client’s money is also important. I serve you with a part of time for my honored customers. Please know about it.

 

 

[yitech]

I did some digging after watching Li Lu's video pitching Korean preferred stocks.

 

You can purchase London-based GDRs for Hyundai and Samsung preferred shares via Interactive Brokers.

The conversion ratios are 2:1. You can divide the closing price in Korea by 2 and convert it from Korean Won to USD.

 

HYUD (HYUD.IL under Yahoo Finance) is the shares for Hyundai Preferred class 1 share (005385.KS). 4X P/E currently.

SMSD (SMSD.IL under Yahoo Finance) is the shares for Samsung Preferred share (005935.KS). 5X P/E currently.

 

Both were trading at larger discount to commons (005380.KS for Hyundai common and 005930.KS for Samsung common) around May/June, but the discount has been narrowing since.

They are under the exchange symbol LSEIOB1 for IB accounts.

 

I used to own SMSD, but now own only HYUD. I purchased HYUD at around 3.2 P/E.

[misterkrusty]

yitech,

 

can you please tell me where I can find a recording of Li Lu pitching korea preferreds?

 

thanks!