While already investment grade, both S&P and Moody’s have chimed in saying that Jong-Il’s death changes nothing to the nation.  It was Fitch which could still upgrade South Korea because its “A+” rating now has a “Positive” outlook.  Fitch also joined S&P and Moody’s to note that the death poses no downgrade or outlook change.

This is likely all welcomed news for holders of the iShares MSCI South Korea Index (NYSE: EWY) and IQ South Korea Small Cap ETF (NYSE: SKOR) in ETFs and then also for the closed-end fund holders of The Korea Fund Inc. (NYSE: KF) and the Korea Equity Fund Inc. (NYSE: KEF).

It is unlikely that the businesses were truly that worries in South Korea, but the active ADR shares are POSCO (NYSE: PKX) as the Korean steel giant, Korea Electric Power Corp. (NYSE: KEP) as the utility, and SK Telecom Co. Ltd. (NYSE: SKM) in telecom.

Read Also: The 8 Nations Likely To See Credit Rating Upgrades

When we looked at the research for the nations which could see credit rating upgrades the 2010 purchasing power parity GDP was $1.46 trillion. The big issue for investors to consider is that Fitch is only one of three ratings agencies with a “Positive” outlook.  On the other hand, bargain hunters will notice that South Korean equity prices fell nearly 30% from the yearly highs in 2011.

Your email address

subscribe

terms and conditions

JON C. OGG

24/7 Wall St. has focused on the ratings with a “positive” outlook from Standard & Poor’s, Moody’s and/or Fitch with a bias towards nations that investors can easily invest in via ADR shares, closed-end funds, and exchange-traded funds (ETFs). The featured nations that may be upgraded in 2012 are Brazil, Chile, China (with Hong Kong), Indonesia, Peru, Russia, South Korea, and Turkey.

Read: Nations Set For Credit Ratings Beyond Upgrades, Beyond The Euro Crisis

There is another slew of countries for which S&P has a “positive” outlook stance: Azerbaijan, Bolivia, Ecuador, Honduras, Latvia, Panama, and Sri Lanka. Unfortunately, these nations are almost impossible for Americans to invest in due to their size, the small number of public companies, and a lack of ETFs or mutual funds covering them.

The 24/7 Wall St. list is presented alphabetically and features relevant ratings. Also included are economic details and important developments to consider. Lastly, we have provided a list of the key closed-end funds, ETFs, and ADRs specific to each nation. Population estimates and purchasing power parity GDP for 2010 were taken from the CIA World Factbook.

iShares MSCI South Korea Index (NYSE: EWY) tracks the performance of publicly traded securities in the South Korean markets inside the MSCI South Korea Index and its shares are down 3.75% at $49.80 against a 52-week range of $40.65 to $69.99.

There are also two more fund vehicles via and ETF called The Korea Fund Inc. (NYSE: KF), down 2.4% at $39.54, and the closed-end fund called the Korea Equity Fund Inc. (NYSE: KEF) which is down 2,2% at $8.78.  Both generally have very light trading volume.  A much smaller and often illiquid play is the IQ South Korea Small Cap ETF (NYSE: SKOR) and its shares are down 5% at $25.59 against a 52-week range of $22.90 to $35.68.

There are three active and large ADRs from South Korea that we track which have NYSE share listings: POSCO (NYSE: PKX), the Korean steel giant, is down 2.9% at $81.47 and the 52-week range is $70.47 to $118.00; Korea Electric Power Corp. (NYSE: KEP) is down 2.3% at $11.28 and its 52-week range is $8.22 to $15.25; and finally SK Telecom Co. Ltd. (NYSE: SKM) is down 2.25% at $13.82 against a 52-week range of $13.35 to $20.29.

Trying to make any bold prediction about what leadership will rise and what policies will come ahead would be like asking a gunslinger to lead a charity fundraiser for children.  Of the defense sector, Alliant Techsystems Inc. (NYSE: ATK) is a top ammunition maker and its shares are up 1% at $55.99 and rocket-maker and missile-maker Raytheon Co. (NYSE: RTN) is up 1.2% at $46.07.  Any coincidence?

JON C. OGG

Other significant ratings actions were taken on Korean steelmaker POSCO (NYSE: PKX), homebuilder Hovnanian Enterprises, Inc. (NYSE: HOV), gaming company Penn National Gaming, Inc. (NASDAQ: PENN), and dining company Darden Restaurants, Inc. (NYSE: DRI).

POSCO’s (NYSE: PCX) domestic Korean engineering and construction subsidiary Posco E&C received a downgrade on its long-term corporate credit from ‘BBB+’ to ‘BBB’ from Standard & Poor’s. The agency also put the company’s long-term corporate credit outlook at ‘negative’. S&P suggested that except for the parent company’s strength the rating could be lower. Weak demand for new housing in Korea coupled with the E&C company’s projected weakness in a soft foreign market for new building led to the downgrade.

Hovnanian Enterprises, Inc. (NYSE: HOV) received a downgrade of its corporate credit rating from ‘CCC’ to ‘CC’ from S&P. The agency also downgraded $1.6 billion in the company’s rated debt securities. The downgrades were due to an exchange offer from one of the company’s subsidiaries that S&P viewed as a ‘distressed exchange’ and “tantamount to a default.” The existing senior notes carry coupons ranging from 6.25% to 11.875% maturing in 2014-2017, and the exchange offer includes new 2% secured notes maturing in 2021. S&P said that if the company goes through with the exchange offer the agency will downgrade the corporate rating to ‘SD’ and the existing exchanged notes to ‘D’. Hovnanian shares posted a new 52-week low today of $1.05, and is trading at about $1.06, down -4.5%, in the late afternoon. The stock’s 52-week high is $5.00.

Fitch Ratings also placed Hovnanian on Rating Watch ‘Negative’ following the exchange offer.

Penn National Gaming, Inc. (NASDAQ: PENN) received an issue-level ratings upgrade on its subordinated debt from ‘BB-’ to ‘BB’ at S&P. The resort and gaming company has agreed to fund redemption of $250 million in 6.75% senior subordinated notes due 2015 with its new revolving $2.15 billion revolving credit facility. Penn’s shares are trading up more than 3%, at $35.19, in a 52-week range of $30.34-$44.29.

Darden Restaurants, Inc. (NYSE: DRI) received a ‘BBB’ rating on a proposed issuance of $350 million in senior unsecured notes due 2021 from Fitch Ratings. The rating outlook is ‘stable’. The new notes will rank equally with existing senior unsecured debt. Darden’s shares are trading up about 2.75%, at $43.17, in a 52-week range of $40.69-$53.81.

Paul Ausick

Glencore’s 2010 revenues totaled $145 billion and profits came in at $3.75 billion. Glencore owns 34.5% of mining company Xstrata PLC (OTC: XSRAY).

Bloomberg is reporting that analysts it has surveyed expect cotton prices to fall by half by the end of this year.  The reason for the drop is increased planting by cotton growers in the US, Australia, and elsewhere. Lower demand for clothing in the wake of higher food and gasoline prices will also work against the price.

Bad weather or other external forces could cause the price to jump as high as $2.30/pound by June, from about $1.97 today. Clothing makers like Liz Claiborne, Inc. (NYSE: LIZ) and retailers like Wal-Mart Stores, Inc. (NYSE: WMT), J.C. Penney Co. (NYSE: JCP) and Gap Inc. (NYSE: GPS) are all facing pressure on margins from the higher cotton prices.

Copper prices have fallen as traders worry that demand may slacken as Japanese carmakers struggle to re-start production. The possibility that radiation contamination in the area around the leaking reactors could delay rebuilding or, in the worst case, make the area completely uninhabitable.

Even if that turns out to be the case, the people dislocated would need to have housing somewhere else, so the demand for copper might slow a little, but it won’t disappear. Copper demand should continue at very high levels. The gap is currently about 400,000 metric tons annually according to The Wall Street Journal.

Korean steelmaker Posco (NYSE: PKX) plans to raise prices on some of its steel products by as much as 20% early next month due to rising costs, particularly for iron ore.

Global oil companies stayed away from both onshore and offshore blocks in an auction held by India’s government. BP plc (NYSE: BP), Royal Dutch Shell plc (NYSE: RDS-A), Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), and ConocoPhillips Corp. (NYSE: COP) did not participate, while BG Group plc (OTC: BRGYY) and BHP Billiton plc (NYSE: BHP) combined to make just one bid. An uncertain regulatory climate got most of the blame for the non-competitiveness of the auction.

Paul Ausick

Glencore’s 2010 revenues totaled $145 billion and profits came in at $3.75 billion. Glencore owns 34.5% of mining company Xstrata PLC (OTC: XSRAY).

Bloomberg is reporting that analysts it has surveyed expect cotton prices to fall by half by the end of this year. [http://www.bloomberg.com/news/2011-03-27/cotton-rally-peaking-as-record-crop-means-first-stockpile-gain-since-2007.html] The reason for the drop is increased planting by cotton growers in the US, Australia, and elsewhere. Lower demand for clothing in the wake of higher food and gasoline prices will also work against the price.

Bad weather or other external forces could cause the price to jump as high as $2.30/pound by June, from about $1.97 today. Clothing makers like Liz Claiborne, Inc. (NYSE: LIZ) and retailers like Wal-Mart Stores, Inc. (NYSE: WMT), J.C. Penney Co. (NYSE: JCP) and Gap Inc. (NYSE: GPS) are all facing pressure on margins from the higher cotton prices.

Copper prices have fallen as traders worry that demand may slacken as Japanese carmakers struggle to re-start production. The possibility that radiation contamination in the area around the leaking reactors could delay rebuilding or, in the worst case, make the area completely uninhabitable.

Even if that turns out to be the case, the people dislocated would need to have housing somewhere else, so the demand for copper might slow a little, but it won’t disappear. Copper demand should continue at very high levels. The gap is currently about 400,000 metric tons annually, according to The Wall Street Journal.

Korean steelmaker Posco (NYSE: PKX) plans to raise prices on some of its steel products by as much as 20% early next month due to rising costs, particularly for iron ore.

Global oil companies stayed away from both onshore and offshore blocks in an auction held by India’s government. BP plc (NYSE: BP), Royal Dutch Shell plc (NYSE: RDS-A), Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), and ConocoPhillips Corp. (NYSE: COP) did not participate, while BG Group plc (OTC: BRGYY) and BHP Billiton plc (NYSE: BHP) combined to make just one bid. An uncertain regulatory climate got most of the blame for the non-competitiveness of the auction.

Paul Ausick

So far steelmakers have swallowed the higher iron ore prices, but that is about to change. Korean steelmaker POSCO (NYSE: PKX) has said that its prices for iron ore have risen 8% in the fourth quarter of 2010, compared with the same period a year ago. And the company expects further rises in the costs of both iron ore and metallurgical, or coking, coal, which together account for about 75% of the cost of making steel.

Miners like BHP Billiton Ltd. (NYSE: BHP) Rio Tinto Ltd. (NYSE: RIO), and Vale SA (NYSE: VALE) are producing as much iron ore as they can. BHP reported that production in the fourth quarter hit a record of nearly 34 million metric tons. That’s an annualized rate of 148 million metric tons, nearly 20% higher than the 125 million metric tons BHP produced in its 2010 fiscal year that ended in June.

This rapidly growing production is apparently not affected by production costs. In its 2010 annual report, BHP did not mention rising production costs as any sort of factor in its earnings. Pre-tax earnings from iron ore production totaled $6 billion on total sales of $11 billion in 2010. The impact on costs came from currency fluctuations, inflationary pressure, and added spending on ramping up new production in Western Australia.

A back-of-the-envelope calculation indicates that 125 million metric tons of ore cost BHP about $5 billion to produce. That’s just $40/metric ton. Costs will rise of course as production increases, but per ton costs are not likely to contribute much to an overall increase in costs.

Profits from iron ore mining should only rise through at least the first half of the year. BHP now sells most of its production on a spot price basis, having decided that even quarterly pricing was causing the company to leave money on the table. Before last year, most iron ore was sold on an annual contract with a steelmaker. The new pricing mechanism, unsuccessfully fought by the steelmakers, puts all the power in the hands of the miners. Even Chinese steelmakers were forced to cave-in to the new pricing scheme.

From a spot price today of about $186/metric ton, iron ore is expected to rise quickly to $200/ton in Asia, mostly on demand from Chinese buyers. North American and Korean buyers might see some relief because demand in these areas is not as strong as in China.

BHP posted a new 52-week high at the end of December, at $93.93/share. The stock is trading at around $88 today, but with a median price target of $107.95 the stock still has some room to run.

Paul Ausick

The Bank of Korea’s hike was only by 0.25% and some had felt that a surprise move was coming.  If it is a surprise move, then how does everyone know?  Many were expecting the move in February apparently.  The policy from the central bank is that inflationary pressures remain and it wants to get ahead of further inflationary pressure as commodity prices remain very high and as the world economies continue their recovery path in 2011.

In ETF-land there is iShares MSCI South Korea Index (NYSE: EWY), The Korea Fund Inc. (NYSE: KF), and the Korea Equity Fund Inc. (NYSE: KEF).  A much smaller play that is often very illiquid is the IQ South Korea Small Cap ETF (NYSE: SKOR),

Investors in America may watch the three active ADRs of POSCO (NYSE: PKX), the Korean steel giant; and there is also Korea Electric Power Corp. (NYSE: KEP) and SK Telecom Co. Ltd. (NYSE: SKM) is down 2.5% at $17.94.

JON C. OGG

Ryanair Holdings plc (NASDAQ: RYAAY) was obviously happy about austerity measures since corporate tax rates in Ireland are not being changed (at least so far).  ADRs for the discount airliner were up 3% at $31.00 late in U.S. trading.  Allied Irish Banks plc (NYSE: AIB) was a surprise winner today with shares higher by more than 16% at $1.04 late in U.S. trading.

POSCO (NYSE: PKX), the South Korean steel giant, was higher after the Koreans decided to not try to work toward an end of days outcome.  The ADR was higher by 4.1% at $99.24 late in the trading day.  SK Telecom Co. Ltd. (NYSE: SKM) was higher as well with ADRs up nearly 3% at $18.50 very late in the trading day.

Alcatel-Lucent (NYSE: ALU) almost never seems to win anymore, yet here we showed a 4.3% gain to $2.90.

Melco Crown Entertainment Limited (NASDAQ: MPEL) got a breather as the Korean incident is not likely to slow Macau gambling.  Shares were up a hair under 5% at $6.32 late in the day.  Tata Motors Limited (NYSE: TTM) on high sales projections.  The ADRs were up almost 10% at $35.70 late in the trading day.

Major markets are set to be open for trading Thursday while America is busy eating turkey for Thanksgiving.

JON C. OGG

iShares MSCI South Korea Index (NYSE: EWY) aims to track the performance of publicly traded securities in the South Korean markets inside the MSCI South Korea Index. The ETF’s shares are down 5.24% at $53.61.  There are also two more fund vehicles via and ETF called The Korea Fund Inc. (NYSE: KF) and the closed-end fund called the Korea Equity Fund Inc. (NYSE: KEF).  The Korea Fund Inc. (NYSE: KF) is down 5% at $40.66 and the closed-end fund called the Korea Equity Fund Inc. (NYSE: KEF) is down 4.8% at $11.28 but both generally have very light trading volume.

There are three active and large ADRs from South Korea that we track which have NYSE share listings: POSCO (NYSE: PKX), the Korean steel giant, is down 4.8% at $96.20; Korea Electric Power Corp. (NYSE: KEP) is down 5.5% at $12.12; and SK Telecom Co. Ltd. (NYSE: SKM) is down 2.5% at $17.94.

We are not going to make a gunslinger’s prediction from half way around the world over how this latest round of military action will play out, even if there are reports of civilian death.  What we would note is that if the military conflict was expected to rapidly escalate into something far worse you might expect to see a rally taking place in the defense stocks.  So what if the defense or war stocks are not moving?  Alliant Techsystems Inc. (NYSE: ATK), the largest bullet maker, is down 0.1% at $73.53 on light trading.  Raytheon Co. (NYSE: RTN), the maker of patriot missiles, is down 0.2% at $46.43.  Lockheed Martin Corporation (NYSE: LMT) makes fighter jets, missiles, combat systems, and many more tools for fighting war and tracking enemies; its shares are down 0.1% at $68.57.

A much smaller play that is often very illiquid is the IQ South Korea Small Cap ETF (NYSE: SKOR) and its shares are down 6.1% at $26.90 on very very thin trading volume.

JON C. OGG