Europe's Amundi: "Korea Is the Most Attractive Emerging Equity Market"

Amundi, the largest asset management company in Europe and a global leader, has identified the Korean stock market as the most attractive investment destination among emerging markets. This analysis points to Korea's overwhelming earnings growth, benefits from the artificial intelligence (AI) and semiconductor cycles, and the government's ongoing corporate governance reform (Value Up Program), which have all combined to maximize the market's undervaluation appeal.

On May 29, NH-Amundi Asset Management announced that Amundi, its second-largest shareholder, released an 'Emerging Markets (EM) Equity Investment Outlook Report' containing these findings.

In the report, Amundi cited regional differentiation, a rally in technology stocks, and earnings growth far outpacing developed markets as the background for emerging market equities reaching record highs despite geopolitical risks in the Middle East. In particular, Amundi presented a positive outlook on the Korean stock market, describing it as "one of the most attractive emerging equity markets." The company noted that, considering the scale of earnings upgrades in Korea, the market continues to trade at a discount compared to other emerging and developed markets.

Amundi explained that, according to market consensus, Korea's expected earnings per share (EPS) growth for this year is as high as 91%—the highest among emerging markets. While Amundi's internal forecasts are more conservative than the consensus, it analyzed that earnings momentum remains positive, profitability is improving, and the technology cycle is also favorable.

Regarding the technology cycle, Amundi pointed out that hardware stocks in Korea and Taiwan have risen on the back of strong AI-driven memory demand. The report also noted that, although memory price increases are typically followed by expanded supply, there have been no such signs yet, which continues to support the earnings of semiconductor companies.

Amundi stated that Korea could be affected by the Middle East conflict through its energy-intensive industries, exporter margins, and weakened global demand. However, the company expects the overall economic impact to be limited. Amundi also mentioned that the Korean stock market recovered quickly after an initial sell-off immediately following the outbreak of the Middle East conflict. In addition, it believes that governance reforms, including the Value Up Program, will provide further medium-term upside potential.

Besides Korea, Amundi also presented a positive outlook on Taiwan and Brazil. For Taiwan, it forecast that demand for semiconductors and AI-related components would drive EPS growth expectations to about 27% and return on equity (ROE) to around 17% in 2026. For Brazil, Amundi pointed to the rapid rise in EPS growth expectations from 12% in March to 21% in April, along with high commodity prices, as key factors.

In contrast, Amundi maintained a neutral view on India and China. While India’s fundamentals remain sound with an EPS growth expectation of about 18%, high sensitivity to oil prices was cited as a short-term risk. For China, Amundi assessed that diversified energy import sources would limit the impact on growth, but inflationary pressure remains significant.

Debora Delbo, Amundi's Senior Emerging Markets Strategist, stated, "While Korea is an energy importer, its high proportion of technology stocks and strong fiscal position support its attractive valuation for AI exposure compared to the United States," adding, "Emerging market equities possess further upside potential, grounded in strong earnings growth and a robust technology cycle."

This content was produced with the assistance of AI translation services.