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Optimism despite challenging period for Weiss Korea Opportunity Fund

Weiss Korea Opportunity Fund (WKOF) announced its half year results for the period ended 30 June 2023. The company’s share price return was flat over the 6 months while NAV return was -3.4%, trailing the reference MSCI South Korea 25/50 Net Total Return Index which appreciated by 6.7% in GBP.

Chairman Krishna Shanmuganathan noted that while the performance is disappointing the long-term performance is more impressive with an annualised return of 7.9% since inception which has seen NAV increase by 116.8% compared to the Korea Index returns of 61.0%.

Commenting on the macro environment and the outlook for the company, the investment manager noted:

“On a year-to-date basis ending 30 June 2023, the benchmark Korea Index returned 14.4% and the KOSPI 200 Index returned 16.1%. To contextualise these returns, Korea was one of the best performing markets in Asia alongside Taiwan and Japan. However, unlike previous market cycles, the stock market gains were not evenly distributed across a wide range of sectors. While the information technology (including memory semiconductors) and materials (including EV batteries and other materials) sectors outperformed the Korea Index, the utilities, healthcare, financials, and consumer staples sectors generated negative returns. Foreign net buying was also concentrated in select sectors and names. For instance, out of the 12.3 trillion KRW in net buy flow by foreigners, 12.08 trillion KRW (roughly 98%) was focused on one issuer: Samsung Electronics.

“More broadly, the South Korean economy finally began to exhibit signs of a rebound during the second quarter of 2023. Korea’s exports posted a meaningful rise during the final two months of the quarter, even escaping a trade deficit for the first time since February 2022. The improvement in the balance of trade was led by trade exports, which grew 7.9% and 13% in month-over-month terms in May and June, respectively.”

With regard to the company, the manager added:

“WKOF offers Shareholders the regular opportunity to elect to realise all, or a part, of their shareholding in once every two years, on the anniversary of WKOF’s admission date. The latest realisation opportunity occurred in May 2023. We were pleased to see that only 41,496 shares were tendered (0.06% of WKOF’s shares). The directors wish to thank our shareholders for their patience and long-term perspective as evidenced by the limited number of shares tendered.”

WKOF : Optimism despite challenging period for Weiss Korea Opportunity Fund

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