Shinhan Financial Group (SHG-N)

KB is a Korean bank. There do a lot of trading with China, so the valuations have come down as a result of the China-US trade war. This is a good time to buy anything Korean, he thinks. He prefers Shinhan, who has just bought INGs insurance business and they have been buying back shares.

This is a Korean bank. Its earnings are growing in double digits. Its net interest margin is increasing. Its dividend yield is 3.5%. It is expanding via bolt-on acquisitions in Vietnam and elsewhere. It trades at half of tangible book value. Its sector is incredibly cheap. He has met with their management and respects them. Corporate governance issues are not a big consideration for him as they apply to Korean banks. He is concerned about pressure on the banks to lend to small and midsize businesses. So far, this has been a huge benefit but it creates some risk. Some of its customers are among the largest companies in the world. He sees this as a lower-risk financial play. (Analysts’ price target is $55.00)

A very well-run bank, pure retail. Loan loss ratios are extremely low. Management is very conservative. Also, Korea had not hike rates in many, many years. Recently sold her holdings, primarily because of the change in the global trade picture. There has been a shift towards more inward trade protectionism, and Korea is an extremely open economy, 40%-45% of their GDP is export oriented. Because of that, she has reduced her Korean exposure.

A Korean bank that you can think of as similar to a large Canadian retail bank. This is the largest player in Korea. The Korean banking sector has been going through a pretty tough few year’s adjustment. She likes this one. It is very well-run. Very conservative management.

(Top Pick Jan 6/14, Down 13.01%) Money flowed out of a lot of other markets into the US. There is really nothing else going on here. It is trading at a single digit valuation. Korea is a net generator of foreign currency so they don’t rely on US dollar inflows or outflows.

A domestic bank in Korea. Korea, unlike most emerging-market countries, is a net exporter so they don’t rely on foreign capital. Korea is very well-positioned and is more of a developed market more than any emerging-market. Earnings are poised to increase for all of the Korean banks.

Unlike most other emerging markets, which will suffer if US interest rates rise and money flows out of them, South Korea is a net exporter so they don’t need any foreign currency. This and the other Korean banks are going to benefit big-time as the Korean economy has started to turn around. Their housing market has picked up. All the Korean banks are trading at very, very cheap multiples. This is a more mature emerging market.