Amplify: "Korean Stock Market Is Being Discounted... Not an Emerging Market" (Comprehensive)

Christian Magun Amplify CEO Holds Press Conference in Korea
"Focus on High Dividend ETFs... US Stock Market Expected to Perform Well This Year"

"Morgan Stanley Capital International (MSCI) classifies Korea as an emerging market, which I believe is a short-sighted and inaccurate perspective."

On the 7th, Christian Magoon, CEO of Amplify, a US-listed ETF management company, is making a presentation at the Korea Exchange in Yeouido, Seoul. Photo by Hyunseok Yoo

Christian Magoon, CEO of Amplify, stated this on the 7th during a press conference held with Samsung Asset Management at the Korea Exchange in Yeouido, Seoul, in response to a question about the Korea discount. He said, "Considering Korea's industries, infrastructure, and global brands, classifying it as an emerging market is insulting."

However, he explained that geopolitical risks are one of the factors contributing to the Korea discount. He said, "Looking at Israel, which, like Korea, has many startups relative to GDP and is led by the technology sector, it also receives a discount due to geopolitical tensions."

Magoon CEO described this year as a good time to invest in the U.S. stock market because of the upcoming presidential election. He explained, "Historically, stock market performance has been strong in years with U.S. presidential elections. While history does not always repeat itself, it does serve as a good guide."

He also noted that although the high interest rate trend continues, historically, since rates are not at ultra-high levels, they could rise further. He said, "After the end of 13 rate hike cycles, the S&P 500 showed good returns in 11 of the following six months. Historical data shows that stocks performed well even when rates increased."

However, he advised preparing for a prolonged high interest rate environment as the timing of the U.S. Federal Reserve's rate cuts may be delayed. Magoon predicted that companies with strong free cash flow can maintain steady dividends and stable stock performance despite a prolonged high interest rate environment. He emphasized the need to respond to uncertain markets with exchange-traded funds (ETFs) composed of such high-dividend stocks.

He also foresaw the necessity of diversified investment in technology stocks. According to Amplify, the quarterly year-over-year earnings per share (EPS) growth rate of the so-called M7 (Magnificent 7)?including Microsoft, Nvidia, Google, Amazon, Meta, and Tesla?peaked at 63% in Q4 2023 and is expected to decline thereafter.

Since the technology sector, including IT and telecommunications, has shown good performance and is expected to continue growing, he argued that it is better to avoid concentrated investment in M7 stocks and instead adopt a strategy of diversified investment in technology stocks. He explained, "One of the sectors supporting AI outside of the M7 is cybersecurity. As AI-driven hacking and cyberattacks may expand in scope, investing in cybersecurity companies is also a viable approach."

Amplify manages assets under management (AUM) of $9 billion, ranking it among the top 20 ETF managers in the U.S. ETF industry. Samsung Asset Management began collaborating by acquiring a stake in Amplify in April 2022. They localized Amplify’s ETF products, 'BLOK ETF' and 'DIVO ETF,' for the Asian and Korean markets, respectively. In November last year, Samsung Asset Management also listed the 'Amplify Samsung SOFR ETF' on the New York Stock Exchange by replicating the product structure of the KODEX U.S. Dollar SOFR Rate Reactive ETF, which was the first of its kind launched domestically in Korea.