Korean equities are set to remain attractive for the remainder of the year and beyond since the country’s exporters are poised to be a “major beneficiary of the improving economic and political backdrop,” argues Baring Asset Management.

The firm sees the stabilisation of the eurozone debt crisis and a more aggressive growth agenda in the US as good news for Korea’s exporters, which account for a large proportion of the KOSPI index. In fact, Barings notes that since the European Central Bank’s bond-buying announcement on 6 September the KOSPI has returned 4.4 per cent (in sterling terms). The firm concedes that European demand is likely to remain weak for the foreseeable future but it is confident that increasing economic activity in the US and strong consumer demand from developing markets will support many Korean equities.

One of Barings top picks is the confectioner Orion, which enjoys both stable demand domestically and has been pushing into other emerging Asian markets for some years now – it began aggressively expanding overseas in 1995 and now generates more than half of its revenues from countries such as China, Vietnam, and Russia. Barings believes that Orion is set to garner more market share in China through category expansion and capacity addition based on its established strong brand power. The Chinese confectionery market is one to watch since the country’s boom times are leading to shifts in the typical Chinese diet towards more Western tastes; as well as a big uptick in meat consumption, the market remains underpenetrated in Western-type snacks, Barings notes.

Elsewhere, large global companies such as Hyundai Motor and Samsung Electronics continue to gain brand recognition and grow market share in their respective sectors, the firm says. It is also of the belief that “Samsung smartphones are one of the few viable contenders to the Apple iPhone” amid the continuing global smartphone revolution, making Samsung a key holding.

Broadly speaking, the firm is positioning the Baring Korea Trust to benefit from rising consumption and wealth creation in both Korea and key overseas markets such as China, and so the consumer discretionary, consumer staples and healthcare sectors figure highly in the portfolio.

“We also favour high-end consumer names which we believe can capitalise on the Chinese tourism boom. Outside of Hong Kong and Macau, Korea is now the most favoured travel destination for increasingly affluent Chinese tourists and this is supporting the outlook for hotels and casinos,” said Hyung Jin Lee, manager of the Trust.