📈 The Korean Discount

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Good morning.

Markets are moving ahead of Powell’s speech and a tense French vote, South Korea reels from political drama, and Wells Fargo is making bold bets for 2025.

Grab your Iced Latte and let's get into it! ☕️👇️

Markets

📈 Stocks Post Small Moves Before French Vote & Powell speech
European stocks and US equity futures ticked up, with traders closely watching political turmoil in France and awaiting Federal Reserve Chair Jerome Powell’s remarks. S&P 500 futures gained slightly after the index hit its 55th record high this year yesterday. Meanwhile, the dollar strengthened, and 10-year Treasury yields rose.

All eyes are on France, where a looming no-confidence vote over the budget could destabilize the government, while Powell’s speech and US economic data may shape expectations for a December Fed policy shift.

🇰🇷 South Korea stocks drop as opposition parties move to impeach President Yoon
South Korean markets tumbled Wednesday as political pressure mounted on President Yoon Suk Yeol following a chaotic martial law decree that was imposed and quickly rescinded. The Kospi index slid 1.44% to 2,464, while the Kosdaq dropped 1.98% to 677.15, clawing back some earlier losses of over 2%.

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🐂 Wells Fargo issues Wall Street's most bullish forecast yet
Wells Fargo set a bold new target for Wall Street’s 2025 stock forecasts, predicting the S&P 500 could hit 7,007 by year-end. This projection, issued by equity strategist Christopher Harvey, suggests a potential 26% rise for the index in 2025.

🧑‍🏫 20 Lessons From 20 Years of Managing Money
Ben Carlson marked 20 years in the investment business by sharing 20 key lessons he's learned along the way.

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The Korea Discount

South Korea’s markets took a hit this week, as President Yoon Suk Yeol’s brief martial law declaration reignited investor concerns over the “Korean Discount.” The term refers to the persistently low valuation of Korean stocks, with the KOSPI 200 index’s price-to-book ratio sitting below 1, compared to 3.5 for the MSCI World Index.

Factors behind this discount include geopolitical risks with North Korea and the dominance of chaebols, opaque family-run conglomerates that often fail to reward shareholders. The aftermath of Yoon’s martial law episode, swiftly overturned by parliament, highlighted these ongoing challenges.

Samsung Electronics, a flagship company, trades at just 9.2 times future earnings, far below its rival TSMC’s 18.5. Daniel Tan of Grasshopper Asset Management notes that this incident may push investors to demand an even higher risk premium for South Korean equities and the won, further deepening the discount.

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