After many years of being labelled as an eternal “value trap,” the Japanese equity market has emerged as an investment hotspot in 2023. In a world of high equity market valuations and record levels of corporate leverage, investors have rightly begun to focus on Japan’s cheap assets, hordes of cash and accelerating corporate governance reform. While Dalton continues to believe that Japan represents a standout opportunity globally, we recommend that investors also consider the opportunity in Korea, a country that shares many of the same characteristics: a historically unloved market, full of highly discounted and high-quality assets, and a market where corporate governance reform is paving the way for engaged managers like Dalton to unlock value. In this update, we lay out our investment case for a dedicated Korean allocation.
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