Be smart: Invest in South Korea, home of the smartphone

Courtesy: Jyusin on Wikimedia Commons

If you want to be smart with your money, consider investing in a country that leads the way in smartphone technology: South Korea.

Samsung recently released the Galaxy Note, the 5.3-inch half-phone, half-tablet otherwise known as the “phablet.” The electronics giant plans to sell 10 million models by the end of the year, according to Forbes (http://www.forbes.com/sites/parmyolson/2012/02/28/why-get-a-tablet-when-you-can-have-a-phablet/). If you haven’t seen what the gadget can do, search “phablet” on YouTube.

While it’s true South Korea is on the cutting edge of technology, timing is everything when it comes to investing.

“Given the fact that South Korea’s economy is tied to exports and external demand, it does move in tandem with the global economy. I think that it will continue to be challenged from that perspective,” global venture capitalist Jalak Jobanputra said in a phone interview.

South Korea’s economy is going through a rough patch because of external factors like the ongoing European debt crisis and instability in the Middle East. The latest news about a U.S. soldier’s killing of 16 civilians in Afghanistan is amping up tension in a region already getting attention for surging oil prices.

“Oil is an input cost to almost everything. There’s no way any country can escape,” managing director of WB Wealth Management Albert Lu said in a phone interview. He added, “I think for most economies I expect it to be rough, especially in the very short term. Even this next year is going to be difficult.”

But the KOSPI Composite Index, the country’s representative stock market index, has been steadily climbing since October, when it took a hit because of Europe’s sovereign debt crisis. For those who aren’t afraid of taking a risk, this might be the ideal time to jump in and invest while everyone else is watching and waiting.

It does take guts to invest now, especially because of lingering fears of contagion from Europe’s debt crisis and China’s economic slowdown.  South Korea’s central bank is keeping the benchmark interest rate at 3.25 percent for the ninth straight month.

The Bank of Korea released this statement in a recent press release: “In the coming months… the Korean economy is expected to maintain a moderate trend of growth for the time being, influenced by external conditions including the global economic slowdown. In terms of the upside and downside risks to its future growth path, the downside predominate.”

The central bank is reluctant to initiate a shift in the nation’s monetary policy. It is giving the economy room to grow before raising interest rates, which it will eventually have to do once inflation becomes an issue.

“Even in regions in the U.S. where overall weakening demand for products, consumer electronics still continued to hold up,” Jobanputra said. A new report forecasts that by the end of 2016, 96 percent of all U.S. mobile handset sales will be smartphones. Compare that to the approximately 33 percent of smartphone handset sales in 2009. With the smartphone market growing, the time to invest might be now.

South Korea’s economy has expanded consistently for the past few years and is projected to grow into the first quarter of 2013. It grew 3.9 percent over 2010 when the GDP was $1.495 trillion, and grew over the $1.409 trillion in 2009.

“In the long term, Korea has already demonstrated ability to innovate, manufacture products for a country to prosper,” Lu said.

South Korea ranks as the 13th largest economy in the world and the fourth largest economy in Asia.

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