The Best Stocks in Korea Are Not Samsung or SK Hynix!

Finance-focused summary (Korean market / investing themes)

Market context & narrative

The discussion frames Korea as being in a transition driven by:

• Corporate governance reforms, including a mentioned commercial code amendment completed in late last year / early this year
• Ongoing debates around capital allocation, especially dividend payouts vs. reinvestment
• Speculation about an AI “super cycle” centered on large Korean chip names, with knock-on effects across the Korean market

The guest argues the AI-led boom is cyclical and not guaranteed to persist indefinitely. In contrast, the broader opportunity for Korea may be stronger in “value” and governance-driven unlocking of enterprise value.

Capital markets positioning / flows (qualitative)

The newsletter emphasis described by the host focuses on market mechanics and flow dynamics:

• Positioning and the movement of money among institutional, retail, foreign, and domestic participants

Corporate governance & “activism 2.0” framework

Paul Song contrasts earlier activism approaches with a more Korea-specific method:

• “Shoulder activism 1.0” (early 2000s): attempted a Western-style pressure/confrontation model; viewed as not working in Korea
• “Shoulder activism 2.0” (current / future): aims to reduce resistance in management and use private, friendly dialogue to secure buy-in before public proposals

He suggests the shift from 1.0 to 2.0 may require a mid-to-long term evolution, potentially taking about two decades.

Dividends vs. reinvestment (explicit disagreement/caution)

The host asks why Samsung Electronics and SK hynix—noted for returning “billions of dollars” via huge payouts/dividends—would do so if semiconductors are in an AI-driven growth phase.

Paul’s response includes these points:

• Dividend/capital return decisions may be influenced by:
  • Governance reforms
  • The commercial code amendment
  • Pressure from activist/major holders, including funds chasing capital return
• He is uncertain whether the timing/level is “right” given:
  • Ongoing investment needs (capex)
  • The idea that growth firms should reinvest to raise enterprise value rather than pay it out
• Key caveat: firms differ—capital allocation should be case-by-case

Valuation / “Korean value stocks” thesis (explicit numbers + caution)

Paul argues many Korean stocks trade at low price-to-book (P/B) levels:

• He states “over half” of listed companies trade below roughly 0.5x–0.2x–0.3x P/B (as shown in garbled subtitles mentioning “0.5 … 0.2 … 0.3 times price book”)

Why this gap exists, per Paul:

• Book value reflects older accounting costs (IFRS/accounting-standard context)
• Meanwhile, he claims real estate/tangible assets have appreciated dramatically—roughly 3x–5x over time—making book-based valuations look artificially depressed

Methodological implication:

• Look for asset-backed/value opportunities that may not be “cheap because of weak fundamentals,” but because there is no mechanism to unlock value

Caution:

• He warns against value traps
• He prefers “value unlock” scenarios where governance/reactivation can improve valuation

Specific investing targets / areas mentioned (no portfolio weights given)

Paul says he is working on identifying value opportunities rather than naming a universally recommended list. Still, he mentions categories and governance-driven setups:

• Cash-rich / succession / shareholder-discount structures
  • Focus on “cashri” (likely cash-rich) and succession themes (pre- and post-succession)
  • Holding companies trading at a NAV discount (often framed as an “orphan sub” discount)
  • “Orphan subs”: subsidiaries considered non-strategically important and therefore neglected
• Non-AI rotation / sector-level ideas (top dogs rotating)
  • AI-driven manufacturing leaders may eventually rotate toward:
    • Ship builders
    • Defense
    • Steel
    • Autos
• A longer-run shift toward “soft power” (K-pop/K-drama/film) as a macro-cultural/business engine (not quantified in the clip)

Market structure reform: zombie firms, delisting, and short selling

Zombie companies / delisting

Paul says he advocates delisting “zombie” companies:

• It has been a topic for the last two years
• Rules are becoming more stringent as of “first July” (year not explicitly stated in the subtitles)

Short selling

He argues Korea has a system, but real short selling volume is low. He suggests modernization requires a real short-selling mechanism so that “zombie” or structurally bad firms can be punished by market discipline.

He also notes political sensitivity:

• Short selling is controversial due to election sensitivity and retail backlash
• Subtitles mention roughly 16 million investors and a voter-count comment implying a large portion could be retail-backed (numbers are garbled)

Timing / expectations

He advises that the current environment isn’t necessarily the end of a bull market, but expects:

• Noise and volatility
• A potential fade after a cyclical AI peak
• Broadening into value and other sectors

On activism effects:

• He suggests activism may initially deliver a “reputation trade” rather than “return trade” within the first 1–2 years

A specific timing callout:

• Possible interesting AGM season around March next year, driven by increased activist funds

Disclosures / disclaimers

• No explicit “not financial advice” disclaimer appears in the provided subtitles.

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Instruments / tickers mentioned

• Samsung Electronics
• SK hynix (also missubtitled as “Heinix” / “Highix”)
• TSMC (Taiwan Semiconductor Manufacturing Company), referenced for comparison

No specific ETFs, bonds, commodities, or indices are named in the subtitles.

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Step-by-step / methodology frameworks mentioned

“Shoulder activism 2.0” (Korea-contextualized governance approach)

• Reduce management resistance (not immediate textbook pressure)
• Use private, amicable dialogue with management
• Seek management comfort / “say-yes” before public proposals
• Apply case-by-case based on:
  • Company situation
  • Cash flows
  • Capex needs

Value investment screen (conceptual)

• Prefer stocks trading at deep discounts, notably low P/B
• Reconcile low book value versus higher real asset economics (tangible/real estate appreciation)
• Seek governance/structure unlocks, such as:
  • Cash-rich
  • Succession
  • Holding-company NAV discounts
  • Orphan sub neglect

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Key numbers & quantitative points (as stated)

• Dividend/capital return:
  • “Billions of dollars” returned by Samsung Electronics and SK hynix (no exact figure given)
• Valuation levels:
  • Many stocks around ~0.5x down to ~0.2x–0.3x P/B
• Asset appreciation rationale:
  • Tangible/real estate assets allegedly increased about ~3x–5x
• Activism timeline:
  • Transition from 1.0 to 2.0 may take roughly two decades
• Short selling sensitivity:
  • Mentioned around elections (no specific dates)
• Delisting/listing rule change:
  • Mentioned “as of first July” (year unclear)

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Presenters / sources mentioned

• Jason (host/interviewer)
• Paul Song (guest; founder/author associated with the “Korea Bridge” newsletter)

Paul also references related platforms such as Substack and LinkedIn, but no additional named external sources are cited in the subtitles.