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South Korea

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South Korea Moves on U.K. Energy Assets as Competition with China Increases

Korea National Oil Corp. (KNOC) on Friday made a hostile bid for the United Kingdom's Dana Petroleum PLC, marking the first time a state-owned Asian company has gone directly to shareholders.

The move underscores South Korea's determination to double its oil output by 2012 and increase its energy security. It also shows that South Korea will not be denied energy assets, despite being outbid by Chinese companies in several instances.

KNOC took the $2.9 billion (1.87 billion pound) bid to Dana's shareholders after the oil explorer rejected KNOC's previous offer of 1,800 pence a share offer. In a filing with the London Stock Exchange, KNOC said it had support from 48.62% of shareholders, putting the needed 50% approval target within close reach.

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China Dumps the Dollar as Yields Sink

China cut its holdings of Treasury notes and bonds by the most ever in June, instead favoring the debt of Europe, Japan and Korea. The move has fueled speculation that plummeting U.S. yields are driving away the Asian giant, which has ambitions for its currency, the yuan, to replace the dollar as the world's main reserve currency.

China's holdings of long-term Treasuries fell by $21.2 billion in June to $839.7 billion, a U.S. government report showed recently. Total Chinese investment in U.S. debt declined 2.8% to $843.7 billion, the smallest in a year, following a 3.6% slide in May.

The shift comes as President Barack Obama increases U.S. debt to record levels, making it harder to finance sales to sustain the U.S. economic expansion.

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South Korea Raises Interest Rates, Joining Asian Movement to Reduce Stimulus

South Korea on Friday joined a chorus of Asian countries in cooling their economies by raising its benchmark interest rate and removing monetary stimulus from its financial system.

The Bank of Korea (BOK) joined counterparts across Asia by notching its rate up by 0.25 percentage point to 2.25%, lifting its key policy rate for the first time since August 2008 - the beginning of the global financial crisis.

But the BOK stressed it is just nudging rates up from emergency levels to counter the threat of inflation and curb a rise in household credit. Asia's fourth-biggest economy joined other economies during the global financial crisis by slashing interest rates, knocking them down three times and shaving a total of 325 basis points off the benchmark rate.

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Six Ways to Invest in Korea – Asia's Can't-Miss Market

With the U.S recovery looking a bit iffy after last week's unemployment report, Japan and Britain battling huge budget problems and Europe in trouble because of the Greek debt crisis, investors have quite naturally shifted their focus to Asia.

But even there the pickings seem a bit slim. Asian stalwarts China and India show signs of overheating (India more so than China). Taiwan and Singapore - both excellent markets - seem pretty fully valued right now.

That leaves us with one Asian market whose economy is enjoying well-balanced growth, whose government is a model of competence and efficiency and whose stock market is surprisingly reasonably valued.

I'm talking about South Korea.

To discover the five essential Korea profit plays, please read on...

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This Investment Portfolio is on Fire …

Dear Money Morning reader:

We get asked a lot about the track record of The Money Map Report, our monthly advisory service in which Keith Fitz-Gerald, Martin Hutchinson and the rest of the Money Morning team ferrets out investment opportunities based on some of the most powerful global trends at work today.

Let me just say this: This portfolio is on fire.

Of the 24 stocks and exchange-traded funds (ETFs) in the portfolio, 21 are winners. Indeed, only three of the holdings are under water - two of them by such nominal amounts as 1.77% and 1.24%.

But the gains are eye-popping.

I obviously can't name the stocks or ETFs in the Money Map portfolio, but the current list of winners includes gains of 122.2%, 91.5%, 61.9%, 53.1%, 46.2%, 37.6%, 35.1%, 32.1%, 31.6%, 28.8% and 28.6%.

The Money Map Report is able to notch such gains because team members identify the most-powerful and profitable trends long before Wall Street even understands what's happening.

In fact, here's an example from yesterday (Monday).

Have you been reading about steel prices? The steel market was hit hard by downturns in the auto and construction markets. But prices have been on a tear. Scrap steel has zoomed 25% since November. Just yesterday, The Wall Street Journal reported that China's growing appetite for steel alone should be enough to cause steel prices to soar.

Now Wall Street is calling for steel prices of all types to continue their advance well into the spring. In fact, yesterday reported that Wall Street equity strategists are now telling investors to buy the leading global steel stocks.

That's a nice call. But it's a little late.

Back in April - that's nine months ago - Money Map's Hutchinson told subscribers to buy shares of Korean steel giant Posco Inc. (NYSE ADR: PKX).  At the time, Hutchinson said three catalysts would send the shares higher:

  • A turnaround in Korea.
  • Rising steel demand from China.
  • And an overall increase in global steel prices.
Hutchinson was three for three. Since he made that call, shares of the world's No. 4 steelmaker have soared more than 91% - with Wall Street now telling readers to get into the game.

In other words, while Wall Street was waiting for a clear signal as to which way steel prices (and steel stocks) were heading, Money Map Report readers were almost doubling their money on Posco.

And that's just one example.

In the newest issue, for instance, The Money Map Report will look at such opportunities as:

  • A cash-rich company that's in a great position to buy back shares - and that may become a takeover target.
  • A firm that's perfectly positioned to capitalize on the uptick in natural-gas prices, and that may be snapped up as part of the anticipated consolidation in the energy sector.
  • And a firm that's poised to benefit from a rising tide of IT investments.
The Money Map team scours the globe in search of the best investment opportunities. The fact that it usually does so well ahead of Wall Street is the main reason for the returns we listed above.

In the aftermath of the worst financial crisis of our lifetime, it's understandable that most investors want to avoid Wall Street and paddle their own canoe.

That task becomes a lot easier, though, when you have the right kind of map to guide you.

That's what we work to provide.

Good investing ...

William Patalon III
Executive Editor
Money Morning/The Money Map Report

[Editor's Note: For more insight on global-investing profits, hot portfolios, and the best investment opportunities around the world, check out The Money Map Report.]

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Asia's Economic Recovery Gathering Steam with China at the Helm

Manufacturing data today (Monday) confirmed that Asia's economic recovery is gaining strength, and China - whose economy may have expanded at a rate of 9.5% in the fourth quarter - is leading the revival.

The China Federation of Logistics and Purchasing on Sunday said the country's official purchasing managers' index (PMI) rose to 55.2 in December from 54.3 a month earlier. That's the biggest increase since April 2008, and it was aided by an increase in trade. The gauge of export orders rose to 54.5 and the reading for imports climbed to 52.8.

Similarly, the China Manufacturing PMI produced by HSBC Holdings PLC (NYSE ADR: HBC) and Markit Economics jumped from 55.7 to 56.1 last month. The index's average monthly increase in the fourth quarter was the largest on record.

Economists point to these numbers as further evidence of a robust recovery for China's economy, which grew at an 8.9% annualized pace in the third quarter.

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South Korea's Exports Rise, but Future Looks Murky

Year-over-year exports from South Korea rose for the first time in 13 months amid higher shipments to two of the world's largest economies. However, future sustainability of the export-based economy is made uncertain by questions surrounding the removal of global stimulus measures. Overall shipments rose 18.8% to $34.3 billion in the first 20 days of November, Korea's Ministry of Knowledge Economy said yesterday (Tuesday). Roughly one-third of shipments were to the stimulus-backed economies of China and the United States, where exports increased by 52% and 6.1%, respectively.

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Obama Commits to Free Trade Deal With South Korea, But Auto Trade Remains Sticking Point

On the last leg of his four-nation tour in Asia, U.S. President Barack Obama revived the issue of a still-pending free-trade agreement signed in 2007 with South Korea (KORUS FTA), but an auto trade imbalance will continue to be a major obstacle to Congressional approval. At a news conference in Seoul, President Obama and Korean […]

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It's the World's Hottest Market – And it Isn't China

Which global economy grew at an annual rate of 11% in the second quarter, and will report a second-consecutive double-digit advance when it reports on Monday? Hint: It isn’t China. But you are looking in the correct part of the world. The economy in question is South Korea, which has enjoyed an astonishing rebound since […]

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Why You Need to Look at these Three "Zombie-Free Zones"

Quantum Fund co-founder George Soros had it right on Monday, when he said the U.S. recovery would be held back by "basically bankrupt" banks and companies. I call them the "zombies," the institutions being propped up by government bailouts. Companies like Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC), General Motors Corp., Chrysler […]

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South Korea' C&M Cable Scooped by MBK Partners and Macquarie Group for $2 Billion

By Mike Caggeso Associate Editor Private equity firm MBK Partners and Australia' Macquarie Group have completed a $2 billion joint acquisition of South Korea' second-largest cable television operator, C&M Co. Ltd. The companies targeted the TV operator position because of South Korea' sturdy and growing economy, which is quickly developing a taste for digital and […]

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South Korea's Trade/CPI Paying the Price for Crude's Sharp Rise

By Mike Caggeso Associate Editor The sharp rise in the price of crude oil is a key culprit for South Korea's record imports and rising consumer prices last month. While exports rose a boisterous 20.2% to $31.5 billion, imports leaped 27.3% to a record $32.3 billion. Crude imports alone jumped 60% to $6.2 billion last […]

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Warren Buffett and Berkshire Hathaway Purchase Stakes in 20 South Korean Firms, Including POSCO

By William Patalon III Managing Editor Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman Warren Buffett yesterday (Thursday) paid his first visit to South Korea, where the billionaire U.S. investor has invested in 20 companies, including a 4% stake in the country's Number One steelmaker, POSCO Ltd. (PKX), South Korea's Yonhap news agency said. In an email […]

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