Investment Adventures in Emerging Markets


Catching the next Korean wave

Export powerhouse South Korea has been navigating global trade shifts well, while still expanding its K-wave cultural influence. Amid this remarkable growth, Franklin Templeton’s Head of Global Index Portfolio Management, Dina Ting, discusses South Korea’s upcoming elections and the possible implications on the country’s global trade and foreign investment.

Add a “K-” before most pop culture categories and you’ve probably named a growing South Korean phenomenon. Think K-Pop, K-Beauty and K-Drama, which all fall under the wider catchall terms, K-Culture and K-Wave, or hallyu in Korean. In the 12 years since South Korea’s Gangnam Style sensation caught on globally, world-wide fandom over the country’s cultural exports, or K-Content, has only increased.

Of course, when it comes to South Korean export prowess, focus tends to fall on the market’s biggest sector—technology—and its star goods: computers and integrated circuits. South Korea’s dominance in heavy industry arenas, such as autos, shipbuilding and chemicals, also command attention. The country’s March export figures grew for a sixth consecutive month, maintaining recovery momentum. While South Korean businesses have met with slower growth from China, increased shipments to Latin America and the United States have partly offset that weakness. Overall shipments to China in March rose 0.4%, while exports to the United States and Latin America rose nearly 12% and 14%, respectively.1

In December, semiconductor exports jumped nearly 22% from a year earlier given the demand for emerging technologies. While China remains South Korea’s top trading partner, exports from Asia’s fourth-largest economy have been lifted by increased chip orders to the United States. Overseas sales of memory chips in March led to a fifth successive monthly rise in exports, up 35.7% and logging the best performance by value in two years.2

Presidential litmus test

South Korean President Yoon Suk Yeol, who promotes a more pro-business agenda compared to his predecessor, faces a test of public sentiment this month during April’s parliamentary elections.

Yoon’s conservative People’s Power Party (PPP) has had to contend with a legislature controlled by the main opposition Democratic Party of Korea, which has limited the president’s implementation of his agenda. If the PPP can secure a majority of the National Assembly’s 300 seats, Yoon should encounter fewer hurdles in making key appointments and pushing through policies during the remaining three years of his single-term presidency and help his party’s prospects for a 2027 presidential election victory.

Despite somewhat unfavorable domestic public opinion of Yoon in recent weeks, the president is credited for improving historically poor relations with Japan on trade and security and has taken aggressive action to strengthen trilateral security cooperation with Tokyo and Washington—a key move as China continues to assert regional influence.

Regulators have been encouraging better corporate governance reform, aiming to narrow the “Korea discount,” which refers to a tendency for South Korean firms to have lower valuations versus global peers, despite robust cash flows and earnings, often due to poor corporate governance and lower shareholder returns. Some two-thirds of South Korean companies are cheaper than their book value. But increasingly, the country’s firms have been taking a page from Japan’s playbook by boosting transparency, share buybacks and dividends to improve shareholder value. This seems to have caught the attention of foreign investors who have helped South Korean equities achieve the best start to a year since at least 1999 in terms of foreign interest, with US$11.7 billion of net buying as of the end of the first quarter of 2024.3 The FTSE South Korea RIC Capped Index rose nearly 21% in 2023.4

Under Yoon’s administration, unemployment has eased more than expected to 2.6%, driven by both manufacturing and services sectors, and remains lower than the 10-year average rate of 3.5%.5 South Korea also ranked second out of 35 Organisation for Economic Co-operation and Development (OECD) member states in a 2023 assessment of mostly rich countries by The Economist that evaluated share prices, gross domestic product, jobs, core prices and inflation breadth.6

“Startup Korea”

Hoping to propel the country into a global startup powerhouse, the government has introduced a new “Startup Korea” plan backed by detailed strategies for the digital economy, inward and outward investment and private venture capital.

Toward this end, President Yoon hosted Meta CEO Mark Zuckerberg in South Korea in February, along with other technology executives, to explore ways to increase cooperation over artificial intelligence (AI) and digital ecosystems in areas such as smart home appliances, wearable devices and smart cars.

Just as South Korea reigns as an exporter of pop culture, beauty and entertainment content (black comedy thriller Parasite made history in 2020 as the first non-English film to win the Academy Award for Best Picture), the image and reputation of its auto brands has also climbed. As recently as 10 years ago, both Hyundai and affiliate Kia were seen as underdogs in the car industry. But that image has shifted. Last year, both carmakers jointly captured the number two slot in US electric-vehicle sales, trailing just Tesla. Analysts say the allied carmakers (both part of South Korea’s Hyundai Motor Group conglomerate), are poised to cement or advance their lead over non-Tesla rivals this year with fresh electric vehicle models and aggressive pricing.

Swifties or ARMY?

New streaming options and social media have helped the popularity of K-dramas and shows such as Squid Game. In 2023, Netflix pledged to spend US$2.5 billion over the next four years in the country as K-drama mania has grown and helped fuel a surge in global subscriptions.

About three-fifths of Netflix’s users have watched a South Korean show, and viewing time for those programs has grown six-fold in just four years, according to Netflix. And in case you thought Taylor Swift was in a league of her own, K-pop boy band sensation BTS has matched her dominance as #1 Global Recording Artist of the Year two years in a row.7



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1. Source: “Korea’s exports grow 3.1% in March .” The Ministry of Trade, Industry and Energy. April 1, 2024.

2. Source: Ibid.

3. Source: Bloomberg, as of February 27, 2024. Based on the Korea Composite Stock Price Index (KOSPI). Analysis by Franklin Templeton.

4. Source: Bloomberg, April 2, 2024. In US dollar terms. The FTSE South Korea RIC Capped Index represents the performance of South Korean large- and mid-capitalization stocks. Securities are weighted based on their free float-adjusted market capitalization and reviewed semiannually. Past performance is not an indicator or a guarantee of future performance. Indexes are unmanaged and one cannot invest directly in an index. Important data provider notices and terms available at

5. Source: “KOREA REACT: Surprisingly Tight Job Market Says No Rate Cuts Yet.” Bloomberg Economics. March 12, 2024.

6. Source: “Which economy did best in 2023.” The Economist. December 17, 2023.

7. Source: International Federation of the Phonographic Industry.

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