Newscaster fights tears over Kim Jong-il's deathFor the year as a whole, the Kospi has fallen 13.4 per cent, while benchmark indexes in China, Hong Kong, Taiwan, India and Brazil have tumbled more than 20 per cent. After beginning 2011 as the favoured investment of many professionals, emerging market stocks are now regarded in many quarters as a highly risky play on faltering global growth. But some big investors in emerging countries believe the market slide has gone too far. They argue that even if emerging markets encounter a slowdown, growth in developing nations will still outpace levels in the U.S. and Europe. While corporate earnings in countries such as South Korea, Brazil, China, India and Russia once depended on exports to the developed world, they are now getting more of a boost from domestic demand. “When things go down, that’s the time to be putting more money in, not taking it out,” Mark Mobius, who oversees $40-billion (U.S.) as head of Templeton’s emerging-markets group, said in an interview from Brazil. “At the end of day, it’s about value, it’s about dividends.” Warren Buffett, the billionaire U.S. investor, told CNBC television last month that he’s looking to invest in large South Korean companies “with a sustainable, competitive advantage.” Berkshire Hathaway Inc., Mr. Buffett’s holding company, owned 4.6 per cent of the South Korean steel maker Posco (PKX-N82.35-2.18-2.58%) at the end of last year, according to Berkshire’s 2010 annual report. At a time when Canada, the United States and most European countries are forecast to grow slowly or even shrink, China’s economy is on track to expand between 8 per cent and 8.5 per cent next year, compared with an average rate of 9 per cent or faster for much of the past decade. “Even though the short-term growth prospects may dim somewhat, [emerging markets] still have growth rates that are stellar relative to the alternative,” said Paul Taylor, who oversees $14.5-billion in assets in Toronto as chief investment officer of BMO Harris Private Banking. “Maybe China slows from 9 or 10 per cent to 8 or 8-and-a-half per cent – that’s still stellar. Euro-land is still in for a recession.” But investors should be aware of the risks. India is battling accelerating inflation, and Russian growth hinges on the prices it can get for its oil and gas. Equity valuations vary widely among different emerging markets. Hong Kong’s Hang Seng index has a price-to-earnings ratio of 8.2, near its lowest level in three years, but the Kospi, at 17.5, is near its priciest valuation since 2009. In comparison, the S&P 500 has a P/E of 12.7. Political uncertainty is growing in many countries. This year was marked by protests in Russia over Vladimir Putin’s plans to return as president next year, uprisings in China and now a change in leadership in belligerent North Korea that is raising anxiety levels in South Korea. “Emerging markets offer high return with high risk, and a big part of it is the political premium,” Mr. Taylor said. Following Monday’s decline, South Korea’s Kospi was trading near a 10-week low. The 50 largest companies in the index all dropped. Samsung Electronics Co. lost 3.6 per cent, LG Electronics Inc. retreated 4.7 per cent, and Korean Air Lines Co. tumbled 7.5 per cent. “Without question we would view [the selloff] as a buying opportunity, subject to how the politics plays out,” Geoffrey Dennis, emerging-markets strategist at New York-based Citigroup Inc., said in an interview with Business News Network television.
By Kim Yoo-chul Samsung Electronics leads its biggest cross-town rival LG Electronics in almost all consumer gadgets such as TVs and smartphones. However, LG still has the edge over Samsung in air-conditioning. But Samsung is looking to overtake LG in that sector as well, with company chief executive Choi Gee-sung giving more authority to his top confidant Yoon Boo-keun. Yoon helped Samsung beat Japan’s Sony to become the world’s biggest TV manufacturer, according to company officials. Samsung executives have vowed to strengthen the product quality of the firm’s air conditioners after a rare public apology was issued over malfunctions of its products last year. Now the company has confirmed its intention to surpass LG in terms of growth rates. ``Samsung will grow by more than 15 percent globally in air conditioners this year from the previous year,’’ said Samsung senior executive vice president Park Jae-soon, Thursday. LG’s growth projection for this year is 10 percent. Speaking to foreign and local media, the executive said Samsung should effectively tackle lingering problems like global economic uncertainties, rising raw material costs and the fluctuation of foreign currencies. ``Last year was better than a year ago. This year, Samsung is being challenged to overcome economic uncertainties. But we’ve been prepared and those expected risks won’t threaten our bottom line,’’ he said. Samsung released new models for this year in an event Thursday held at its head office in Seocho-dong, Seoul. The profitability of home appliances is dependent upon macro-economic moves because consumers usually refrain from big purchases when economies are in trouble. The company says it’s eyeing China, Thailand, India and Brazil among other countries to expand its home appliances businesses, including air conditioners. It runs manufacturing bases for such products in the four countries. ``We will accelerate the so-called `localization strategy.’ We believe we have done quite well so far and we will continue to do better,’’ Park said. The firm’s home appliances division took up 8 percent, or about 11 trillion won, of the total revenue of 150 trillion won that was reported in 2010. Park said air conditioners accounted for some 20 percent of all home appliances by revenue. ``In order to achieve this year’s revenue target, Samsung is introducing more premium products. Rising tensions over Iran won’t have a negative impact on us,’’ he added. In comparison, LG said it expects its air conditioning unit to report annual sales of around $10 billion by 2015. Samsung is adding more advanced technology to air conditioners to make them even ``smarter.’’ Its devices offer comfort, quiet operation and are environmentally-friendlier. But more technology will mean heavier costs. The Samsung executive admitted that the prices of new models are becoming more expensive. New air conditioners that the firm introduced are in the 2.3 to 5.6 million won price range, according to company spokesman Ko Ho-jin. ``Thanks to rapid technological development, home appliances are smarter and come with various entertainment functions, guaranteeing greater comfort in our new models,’’ Park told reporters. Samsung is in the process of integrating applications that have been scattered in refrigerators and television units, though the executive declined to elaborate further. Appliances for a ``wired’’ home have long been on the market. However, the recent hectic advances in mobile computing initiated by the rise of smartphones and tablet PCs have expanded their growth potential. Although Yoon Boo-keun didn’t attend the event, the head of Samsung’s consumer electronics division, he is going to meet with South Korean and foreign media next week at the International Consumer Electronics Show in Las Vegas to unveil the company’s latest business strategies in home appliances. In a counterattack, the head of LG’s home appliances division Shin Moon-bum will hold a separate press conference at next week’s trade show said LG spokesman Jerry Kim.
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Samsung Electronics' application to set up a new NAND flash wafer plant in China reportedly has been approved by the South Korea government, which industry sources believe will enhance the firm's competitiveness against major rival Toshiba.
A BBC report quoted Korea's Ministry of Knowledge and Economy as saying that Samsung Electronics has won government approval to build a memory-chip factory in China.
Samsung issued a statement in early December 2011, disclosing it had applied with the government to establish a semiconductor production line overseas. Samsung would also conduct discussions with the China government on the possibility of building a NAND flash wafer plant dedicated to producing products at 20nm and below. The Korean firm added it expected to kick off construction of the China plant in 2012, and commence the operation in 2013.
Toshiba has been experiencing higher production costs by keeping its manufacturing sites in Japan. Industry watchers speculate that Samsung's move to construct an advanced 12-inch wafer fab for flash memory production in China would encourage the Japan-based rival to outsource in the future.
Toshiba has been trailing closely behind Samsung in the global NAND flash marketplace, but might lose its competitiveness over the long term due to its unfavorable cost structure, the sources commented.
