Franklin Templeton warns of concentration in Samsung and Hynix, saying “index tracking does not work”
Franklin Templeton 6said that the Korean stock market’s reliance on a small number of large semiconductor stocks shows that simply buying the index no longer works. The company recommended an active approach to finding undervalued, high-quality stocks.
Franklin Templeton 6assessed the Korean stock market, saying, “A strategy of simply buying the index no longer works.” It cited the concentration in which large semiconductor stocks are driving the market’s gains as the reason.
The speaker is Christie Tan, a global investment strategist at the Franklin Templeton Research Center. Strategist Tan explained that the Korean market remains attractive, but that recent movements have been heavily influenced by a small number of large-cap stocks.
In particular, she pointed out that semiconductor mega-caps such as Samsung Electronics and SK hynix had driven the index higher. She also judged that the market as a whole remains undervalued.
Franklin Templeton recommended shifting the focus in this situation toward an active strategy that seeks out undervalued, high-quality companies hidden in the shadow of large-cap stocks, like “sleeping Korean tigers.”
The recommendation also included the structural risks of leveraged funds. The asset manager warned that the concentration in large-cap stocks could combine with leveraged funds to increase volatility.
In conclusion, the company emphasized reviewing dependence on large-cap stocks in portfolio construction and capturing opportunities through stock selection.