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South Korea poised for economic upturn

Baring Asset Management believes that South Korea offers UK equity investors a long-term growth opportunity.

The firm thinks that South Korea is poised for a domestic upturn, resulting from the recovery of the global technology cycle, increased domestic consumption and continued low valuations, prompting new interest in the market.

Asia’s third-biggest economy is now ranked eighth in the world for submitting global patent applications. Its proximity to China is also a driver, with a cheap labour force and large consumer base.

The information technology sector will get a boost from government plans to spend a total of US$783m in a planned multi-billion-dollar free-trade zone.

In 2004, South Korea exports of IT-related goods stood at US$74.7bn. The nation’s information and communication minister Chin Dae-je predicts that IT exports will grow to US$85bn this year.

Baring Korea trust manager Henry Chan says: “All the signs are pointing towards an economic upturn in South Korea. Industrial production rose by 3.1 per cent in January – the fastest growth rate since August 2003. Consumer confidence also rose in January for the first time in nine months.”

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