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Maka
Joined: 12 Jan 2008
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 Posted: Fri Oct 10, 2008 4:49 am Post subject: Investing Question |
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Has anybody any experience investing in korean stocks. I'm looking to buy two companies at the moment and have a few questions.
1. If i buy shares using a korean stockbroker, do i need to be in the country if i want to sell and get my money. eg if i buy posco shares now and plan on holding for 5 years, what happens when i go back to ireland next year and don't plan on returning to korea.
2. Why are the prices of Posco completely different on the NYSE than the kospi, i.e. about $64 on the Us exchange vs 350,000 won on the kospi. |
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Trevor
Joined: 16 Nov 2005
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| Posted: Fri Oct 10, 2008 6:21 am Post subject: Re: Investing Question |
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Foreign stocks trading on the New York stock exchange are called ADR's or American Depository Receipts.
More info here:
http://en.wikipedia.org/wiki/American_Depositary_Receipt
Basically, the reason it has a different price is simply because the shares outstanding are denominated differently on the different exchanges. It's no cause for concern.
Not sure about your other question regarding leaving Korea and keeping an offshore account, though I believe it is possible.
How 'bout giving us the inside scoop on Posco?
| Maka wrote: |
Has anybody any experience investing in korean stocks. I'm looking to buy two companies at the moment and have a few questions.
1. If i buy shares using a korean stockbroker, do i need to be in the country if i want to sell and get my money. eg if i buy posco shares now and plan on holding for 5 years, what happens when i go back to ireland next year and don't plan on returning to korea.
2. Why are the prices of Posco completely different on the NYSE than the kospi, i.e. about $64 on the Us exchange vs 350,000 won on the kospi. |
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Maka
Joined: 12 Jan 2008
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| Posted: Fri Oct 10, 2008 6:59 am Post subject: |
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| Quote: |
| How 'bout giving us the inside scoop on Posco? |
I think that Posco and Sk telecom are selling at very attractive prices right now. Particularly posco which i reckon is selling at about 60% of it's 'true' worth. I think i'm gonna buy some of their stock next week with the aim of holding for 2-3 years. Also by buying now with the won at such a low level i might benefit also if the won eventually strengthens over the next few years. |
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Trevor
Joined: 16 Nov 2005
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| Posted: Fri Oct 10, 2008 3:49 pm Post subject: |
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Posco is a steel and iron manufacturer. Their two-year outlook is largely dependent on growth in commercial construction...its a long-term play but it might work out. Korea isn't going to stop building, I guess. It's trading at seven times earnings, which is attractive, and my guess is it won't go much lower than that, though the company may offer more stock to raise cash and dilute the existing stock. With the credit crunch and Korea's penchant for 'creative accounting', I would think that is your biggest risk. I would research how much cash they have for operations on hand right now and how they plan to raise more if needed. Cashflow for operations is going to be the Achille's heel of a lot of Korean companies in the next few quarters....a tough call but everything now is.
I think you would be reducing your risk quite a bit by trying to buy this thing at the knee rather than trying to time an absolute bottom. Wait for the market to turn around a bit and see how they fare on shaky before you dive in.
That's what I think 
Good luck.
| Maka wrote: |
| Quote: |
| How 'bout giving us the inside scoop on Posco? |
I think that Posco and Sk telecom are selling at very attractive prices right now. Particularly posco which i reckon is selling at about 60% of it's 'true' worth. I think i'm gonna buy some of their stock next week with the aim of holding for 2-3 years. Also by buying now with the won at such a low level i might benefit also if the won eventually strengthens over the next few years. |
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Maka
Joined: 12 Jan 2008
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| Posted: Fri Oct 10, 2008 6:11 pm Post subject: |
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| Quote: |
Posco is a steel and iron manufacturer. Their two-year outlook is largely dependent on growth in commercial construction...its a long-term play but it might work out. Korea isn't going to stop building, I guess. It's trading at seven times earnings, which is attractive, and my guess is it won't go much lower than that, though the company may offer more stock to raise cash and dilute the existing stock. With the credit crunch and Korea's penchant for 'creative accounting', I would think that is your biggest risk. I would research how much cash they have for operations on hand right now and how they plan to raise more if needed. Cashflow for operations is going to be the Achille's heel of a lot of Korean companies in the next few quarters....a tough call but everything now is.
I think you would be reducing your risk quite a bit by trying to buy this thing at the knee rather than trying to time an absolute bottom. Wait for the market to turn around a bit and see how they fare on shaky before you dive in.
That's what I think Wink
Good luck.
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Ya very sensible advice. I definately agree with what you are saying about raising cash. I am a big fan of the ben graham style of security analysis and have used it successfully in the past so i usually take a conservative approach to analysis of stocks. I have a target price that i would like to buy posco at but it is still about 10% lower than the current market price. I'm gonna be patient and if the stock drops below that price then i feel that I will have my required margin of safety, otherwise i wont be buying.
Also Warren Buffett owns about 4% of posco and has done for the past 5 years so that eases my mind slightly about the risks.
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Warren Buffett thinks Korea�s stock market is probably one of the most attractive in the world.
�If you were going to buy indexes of the top 25 world markets you would have it in the top half of the class and likely much higher,� he said.
He also said he would buy more of the Korean steelmaker � POSCO if the price was attractive.
�We certainly are comfortable investing in Korea, as evidenced by our Posco investment,� and additional investments in the country are �not
inconceivable,� Mr. Buffett said. �We like the ethos of Korea for shareholders and we like the performance of the businesses,� he added.
He also said the Korean stock market got about as cheap as any stock market he�s seen in his lifetime, in the period a couple of years before Berkshire bought in.
Vice chairman Charlie Munger said, �I think POSCO is the best steel company in the world and I think number two is a significant step behind.�
Berkshire Hathaway has reported it concluded 2007 with a US$2.14-billion stake in POSCO, or 4.5%, and it paid only US$572-million for the investment. |
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moosehead
Joined: 05 May 2007
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| Posted: Sat Oct 11, 2008 3:11 am Post subject: |
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| Trevor wrote: |
| Posco is a steel and iron manufacturer. Their two-year outlook is largely dependent on growth in commercial construction...its a long-term play but it might work out. Korea isn't going to stop building, I guess. |
you haven't traveled much, huh?
when really hard economic times hit a country, yes, the building stops. the loans stop, people don't get paid and construction jobs stop, midair, midlevel, shells of buildings left standing, it happens - more frequently than you might think.
people default on loans for construction, contractors don't get paid, it's all tied in toether - Posco has other investments and they may not do well - face it, there isn't probably much of anything to invest in right now save alcoholic beverages!!
construction is the LAST thing I would invest in - fyi, it was the over-the-top let's build-build-build housing in the U.S. which was meant to replace the internet boom-to-crash events which are now costing us all so dearly.
just look both ways before you drop your hard-earned cash is all I'm saying. |
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Trevor
Joined: 16 Nov 2005
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| Posted: Sat Oct 11, 2008 3:55 am Post subject: |
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Oh, there's defoinitely risk, and no major brokerage firm is recommending a buy on them right now (uhhh....maybe cuz...they all went bankrupt  ...) but then again they are trading at seven times earnings and their balance sheet is tidy enough for Buffett to buy 4% of the company. I'd say your downside is protected fairly well even despite the expected downturn. I can think of worse places to speculate.
Come to think of it, this would be a pretty good stock to dollar-cost-average: if it goes down, buy more. If it goes up, buy more. Buy a little every month for a year or so. That way you are hedging your potential losses and increaswing your overall chance for a decent return. That strategy often works quite well for a long-term hold (ask Warren )
| moosehead wrote: |
| Trevor wrote: |
| Posco is a steel and iron manufacturer. Their two-year outlook is largely dependent on growth in commercial construction...its a long-term play but it might work out. Korea isn't going to stop building, I guess. |
you haven't traveled much, huh?
when really hard economic times hit a country, yes, the building stops. the loans stop, people don't get paid and construction jobs stop, midair, midlevel, shells of buildings left standing, it happens - more frequently than you might think.
people default on loans for construction, contractors don't get paid, it's all tied in toether - Posco has other investments and they may not do well - face it, there isn't probably much of anything to invest in right now save alcoholic beverages!!
construction is the LAST thing I would invest in - fyi, it was the over-the-top let's build-build-build housing in the U.S. which was meant to replace the internet boom-to-crash events which are now costing us all so dearly.
just look both ways before you drop your hard-earned cash is all I'm saying. |
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bobbyhanlon
Joined: 09 Nov 2003
Location: 서울
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| Posted: Sat Oct 11, 2008 7:46 am Post subject: |
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bear in mind buffett got in at a much, much lower price and so he'll be a lot more comfortable holding through this. steel has had a great run but is cyclical and when the downturn comes their earnings will be impacted.
posco is a great company going at a cheap price.. but don't expect much growth from them in the next few years.
could be good for a bounce in the short-term though.. the stock market is probably oversold right now. |
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Trevor
Joined: 16 Nov 2005
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| Posted: Sat Oct 11, 2008 9:00 am Post subject: |
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I hear you, but where do you see growth in the short term? Maybe it's better to park the speculative portion of your portfolio in something that may have short-term potential and in the long-term is practically a sure thing.
BTW, Apple is coming out with an eight hundred dollar laptop next week (rumor has it).
I wouldn't mid owning some of their stock as they continue to siphon marketshare off of Microsoft..
| bobbyhanlon wrote: |
bear in mind buffett got in at a much, much lower price and so he'll be a lot more comfortable holding through this. steel has had a great run but is cyclical and when the downturn comes their earnings will be impacted.
posco is a great company going at a cheap price.. but don't expect much growth from them in the next few years.
could be good for a bounce in the short-term though.. the stock market is probably oversold right now. |
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