24/7 Wall St. » SKM

Korean Credit Ratings Safe After Kim Jong-Il Death (EWY, SKOR, KF, KEF, PKX, KEP, SKM)

Administrator — Thu, 22 Dec 2011 14:33:01 +0000

If there was one issue which may have created uncertainty around the credit ratings of South Korea, it was the death of dictator Kim Jong-Il in North Korea. We just recently featured South Korea as a nation which could actually face a ratings upgrade, and the good news is that this has not changed.

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.

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.

JON C. OGG

Filed under: ADR, Bonds, ETF, International Markets Tagged: EWY, KEF, KEP, KF, PKX, SKM, SKOR

Eight Countries With Credit Ratings Set to Rise Next Year

Administrator — Wed, 21 Dec 2011 17:14:50 +0000

It seems that all of the nations around the world are facing sovereign credit ratings downgrades or warnings of downgrades. After the United States lost its prized “AAA” rating, the threat of downgrades hangs over all of Europe. Before assuming that the whole financial system is going down the drain with Europe, it is important to realize that some key developing nations are still growing strongly and have better credit metrics. More than 15 nations may even see one or more of the top three ratings agencies upgrade their sovereign credit ratings.

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.

Filed under: ADR, Austerity, Banking, Bonds, China, Commodities, Currency, Economy, Editor's Picks, Emerging Markets, ETF, International Markets, Labor & Unions Tagged: BAP, BBD, BCH, BRF, BRFS, BVN, BZF, CEE, CH, CHN, CZZ, ECH, EIDO, EPU, ERJ, ERUS, EWH, EWY, EWZ, FXI, GOL, GXC, IDX, IF, KEF, KEP, KF, LFL, MBT, MTL, PBR, PEK, PKX, RBL, RSX, RSXJ, SAN, SCCO, SKM, SKOR, SQM, TDF, TKC, TKF, TLK, TRF, TUR, VALE, VIP

Kim Jong-il Death Drives Uncertain Korean Trading (EWY, KF, KEF, SKOR, PKX, KEP, SKM, ATK, RTN)

Administrator — Mon, 19 Dec 2011 14:53:22 +0000

If there is one of several regions which can erupt rapidly, it is around the Korean Peninsula. The death of Kim Jong-il (that photo is a tribute photo for him) after a heart attack has caused more market uncertainty for the South Korean market and the fear is that the North Korean leadership could face a power struggle. The news is taking a toll on the ETFs, Funds, and ADRs which trade based in America as well.

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

Filed under: ADR, Defense, Emerging Markets, ETF, International Markets, Politics Tagged: ATK, EWY, KEF, KEP, KF, PKX, RTN, SKM, SKOR

How Much Is Hulu Really Worth? (CMCSA, NWS-A, DIS, AMZN, DTV, GOOG, YHOO, SKM, NFLX)

Administrator — Thu, 25 Aug 2011 19:00:08 +0000

The bidding process for the online television service Hulu has taken a strange path. The bidding has been delayed to the end of this week. It sure seems as though there is a discrepancy over what this is worth, but that might not be a bad thing actually.

Hulu is owned by Comcast Corporation (NASDAQ: CMCSA) via NBC, News Corp. (NASDAQ: NWS-A), Walt Disney Co. (NYSE: DIS), private equity firm Providence Equity Partners, and the Hulu team. The bidders are said to include Amazon.com Inc. (NASDAQ: AMZN), DirecTV (NYSE: DTV), Google Inc. (NASDAQ: GOOG), and Yahoo! INc. (NASDAQ: YHOO). What is interesting is that some have included SK Telecom Co. Ltd. (NYSE: SKM) of South Korea as a bidder. Others say that is not the case in more recent news.

The fight over values is somewhat confusing and it brings up the idea that the process could either be delayed further or could be cancelled. The Wall Street Journal said earlier in the week that bids might be as low as $500 million, but Reuters said sellers are looking for $2 billion or so.

Hulu was originally going to raise $200 to $300 million in an initial public offering, which would have come close to the $2 billion value. Then it changed its IPO plan to focus on subscription models.

Here is what is interesting, and something we have toiled with for valuing Hulu… Do you value it on subscribers or on ads? Huffington Post showed something that Hulu online advertising was twice as effective as TV.

It seems a bit surprising that Netflix, Inc. (NASDAQ: NFLX) is not considering this. The company has not really wanted to have an ad-model, and maybe it fears that it would have to bundle the service for free rather than as an upsell.

Hulu Plus is an ad-supported subscription service with current and back season shows from ABC, Comedy Central, FOX, NBC, and MTV to connected devices for $7.99 monthly. The free Hulu service aggregates some 260 content companies and the company claims some 625 top advertisers.

This sounds a lot like a situation that is not going to end with a mere press release, but we aren’t implying more than what we have seen at face value. As I am about as anxious as one can be to get away from a PC after work, I am not the person to value Hulu.

JON C. OGG

Filed under: Internet, Media, Mergers and Buy Outs, Private Equity Tagged: AMZN, CMCSA, DIS, DTV, GOOG, NFLX, NWS-A, SKM, YHOO

South Korea’s Rate Hike Surprise Versus U.K. & E.U. (EWY, KF, KEF, PKX, KEP, SKM, SKOR)

Administrator — Thu, 13 Jan 2011 13:07:41 +0000

The news was expected to be setting up for headlines such as “No rate hikes from the Bank of England nor from the European Central Bank” this morning. South Korea changed that news flow. The Bank of Korea decided to surprise markets with an early rate hike for 2011 due to its stance that it needs to cap inflationary pressures. The move resembles recent actions taken out by the Bank of China as it aims to keep a lid on inflationary pressures and to keep its economy from overheating.

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

Filed under: ADR, Bonds, Economy, International Markets Tagged: EWY, KEF, KEP, KF, PKX, SKM, SKOR

As Korean & European Fears Calm, Only Some ADRs Soar (ALU, RYAAY, MPEL, PKX, SKM, AIB, TTM)

Administrator — Wed, 24 Nov 2010 20:37:27 +0000

Wednesday was a strong day for U.S. stocks as at least some fears are waning on overseas pressure. South Korea rallied as the skirmish between the two Koreas did not escalate and as trading partners urged a cooling off. Ireland appears closer to a bailout even if Portugal and the United Kingdom had demonstrations in the streets. Even a rating cut in Ireland failed to topple the apple cart, mostly as it is a day late and euro short… We wanted to take a look at some key ADR winners on the day to indicate levels after European markets had closed but right before the end of the trading day here in America. Alcatel-Lucent (NYSE: ALU), Ryanair Holdings plc (NASDAQ: RYAAY), Melco Crown Entertainment Limited (NASDAQ: MPEL), POSCO (NYSE: PKX), SK Telecom Co. Ltd. (NYSE: SKM), Allied Irish Banks, plc (NYSE: AIB), and Tata Motors Ltd. (NYSE: TTM) were the obvious winners shortly before the closing bell. We added some color in on each to see if there is more to come or if this is just another trading day.

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

Filed under: ADR, Emerging Markets, International Markets Tagged: AIB, ALU, MPEL, PKX, RYAAY, SKM, TTM

Korean-American ADR/ETFs React Sharply on New Military Skirmish (EWY, KF, KEF, PKX, KEP, SKM, ATK, RTN, LMT, SKOR)

Administrator — Tue, 23 Nov 2010 15:30:47 +0000

War and the fear of war create uncertainty for financial markets. If there is one place in the world that you can count on uncertainty rising from throughout the years it is North Korea and South Korea. A new round of cross-border military engagement between troops in North Korea and South Korea has created a wave of uncertainty that pressured stocks and rallied bonds well beyond Asia. What is interesting is that the defense (or war) stocks are not seeing a major interest so far after this new incident.

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

Filed under: ADR, Defense, Emerging Markets, ETF, International Markets, Mutual Funds, Trading Alert Tagged: ATK, EWY, KEF, KEP, KF, LMT, PKX, RTN, SKM, SKOR

Early Bird Analyst Upgrades (AUO, CLB, LAB, SKM, SOHU)

247wallst — Wed, 14 Jan 2009 07:33:53 +0000

These are some of the early bird upgrades and positive research calls we have seen from Wall Street analysts this Wednesday morning with more than two hours to the open:

AU Optronics (NYSE: AUO) Raised to Overweight at HSBC.
Core Labs (NYSE: CLB) Raised to Outperform at JPMorgan.
LaBranche (NYSE: LAB) Raised to Buy from Sell at Goldman Sachs.
SK Telecom (NYSE: SKM) Raised to Buy at Citigroup.
Sohu.com (NASDAQ: SOHU) Started as Outperform at Oppenheimer.

Jon C. Ogg
January 14, 2009

Posted in Analyst Calls Tagged: AUO, CLB, LAB, SKM, SOHU

Sprint About To Be Acquired? (S, SKM)

247wallst — Tue, 15 Jul 2008 13:53:14 +0000

Sprint Nextel (NYSE: S) just saw a rather large surge in volume as per our report at Volume Spike (VSInvestor.com). We saw a surge in trading and price based upon a CNBC report from David Faber that SK Telecom (NYSE: SKM) is in talks to potentially acquire the ailing telecom. This is one of the top brands we predicted could disappear as we know it at the beginning of the year. In fact, we noted back that that SK Telecom had already approached the company.

Faber was very clear that there are no definite terms signed and that a deal is not imminent and potentially weeks away. SK Telecom is actually smaller, so this might also involve private equity or other partners.

Shares spiked 9% on the CNBC report, and are now up over 13% on more than 30.5 million shares having traded hands. Its 52-week trading range is $5.48 to $22.64 and its average daily volume is about 34 million shares.

As a reminder, until something official or quasi official materializes, all such reports are to be considered rumors.

Jon C. Ogg
July 15, 2008

Virgin Hopes Helio Can Slow Customer Defections (VM, ELNK, SKM, S)

247wallst — Fri, 27 Jun 2008 10:27:27 +0000

If you have followed the launch of the "cool cellular" service called Helio over the last year or so, you might be among the few who remembered it even launched. This was the joint venture between Earthlink Inc. (NASDAQ: ELNK) and SK Telecom (NYSE: SKM). Richard Branson’s Virgin mobile USA Inc. (NYSE: VM) has decided it might be able to to turn this into shinola, and if it doesn’t work out it will have ended up being a tiny gamble.

Virgin is acquiring Helio for nearly $39 million. But it is acquiring the company with 13 million shares of stock. The interesting part here is that Virgin may actually get to lower its network costs in the carrier agreement with Sprint (NYSE: S).

Helio will give Virgin Mobile approximately 170,000 existing subscribers with an average revenue per of close to $80.00. It will also give it a a handset inventory of some 85,000 units with a book value of $17 million. With 20% of Virgin’s customers migrating to post-paid products, the company hopes this will add to the retention.

Virgin Group and SK Telecom will each invest $25 million of capital into the operations in the form of mandatory convertible preferred stock with an $8.50 per share conversion price. These will have a four-year maturity and a 6% annual dividend, and SK Telecom will own a combined equivalent of approximately 17% of Virgin Mobile USA and will take two seats on Virgin Mobile USA’s Board of Directors.

EarthLink shares are down over 3% today at $8.72 as this will likely result in a charge for the company. Virgin Mobile USA shares are up less than 1% at $3.00 on the day.

Jon C. Ogg
June 27, 2008