Franklin Templeton Identifies South Korea as a Key Country for Emerging Market Investment

Korean Stock Market Surges 61%, Double the Emerging Market Average
Defense Exports Reach $17.3 Billion, K-Beauty Ranks World No. 2, Medical Tourism Hits 1.17 Million
"South Korea Is an Attractive Investment Destination Where Global Industry, Cul

Franklin Templeton, a global asset management firm with assets under management (AUM) of $1.66 trillion, has published a report designating Korea as a key country for emerging market investments. Specifically, the report highlights that Korea possesses diversified growth drivers in areas such as semiconductors, defense, shipbuilding, K-beauty and K-culture, and medical tourism.

On October 14, Franklin Templeton stated in its report that the Korean and Chinese stock markets led the emerging market rally this year, rising by approximately 61% and 37%, respectively, as of September 23.

During the same period, emerging market stocks posted a return of 28% in dollar terms, which is double the 14% rise of the S&P 500 Index. The rebound was attributed to the weakening of the dollar, policy changes, robust growth compared to developed countries, and shifts in global capital flows.

Franklin Templeton assessed that the rebound in the Korean technology sector, particularly semiconductors, has been supporting the stock market as global demand for memory chips recovers. The company explained that Korea’s leading position in semiconductor manufacturing and investments related to artificial intelligence (AI) are the core drivers of this momentum.

The report also noted that the Korean stock market has achieved significant industrial diversification, rather than relying solely on semiconductors. The top three sectors-telecommunications and technology-each account for about 20% of the market, with financial and consumer goods companies also making up a considerable share.

The report paid particular attention to Korea’s rapidly rising status in the defense sector. Korea’s defense exports surged from about $3 billion in the early 2010s to $17.3 billion in 2022, propelling the country into the world’s top 10 arms exporters. Franklin Templeton explained that Korea’s defense capabilities have now advanced beyond simple component manufacturing to exporting complete systems such as tanks, aircraft, and missiles.

In the shipbuilding sector, the report observed that Korea is emerging as a strategic partner for the United States. As the world’s second-largest shipbuilding powerhouse, Korea is being recognized as a key collaborator in the United States’ “Made in America” policy initiatives. It is projected that it will take the United States several years to decades to rebuild its advanced industrial capabilities in shipbuilding and semiconductors, given the significant shortage of skilled labor and industrial infrastructure. Last year, the United States accounted for only 0.04% of global ship orders. Considering these circumstances, Franklin Templeton concluded that reliable partners like Korea are essential for the United States.

K-beauty and K-culture, as well as Korea’s exports of consumer goods and cultural products, have also become powerful growth drivers for the country. In the first half of this year, Korea’s cosmetics exports reached a record high of $5.51 billion, up 14.8% year-on-year. Korea temporarily surpassed the United States to become the world’s second-largest cosmetics exporter after France. Franklin Templeton assessed that the global spread of K-beauty, combined with the worldwide popularity of K-pop and Korean dramas, continues to enhance Korea’s brand value across consumer goods, fashion, and lifestyle sectors.

Finally, the report identified the rapid growth of medical tourism as another factor boosting Korea’s investment appeal. The number of foreign patients visiting Korea for treatment doubled from 606,000 in 2023 to 1.17 million in 2024, reaching an all-time high. Last year, foreign medical tourists accounted for 7.2% of all visitors to Korea, a significant increase from 5.5% in 2023.

Franklin Templeton noted that the economic ripple effects of medical tourism in Korea extend beyond hospitals to include hotels, retail, and other sectors. The report also highlighted that the Korean government’s active support for medical tourism-through dedicated visas, subsidies, and global promotion-has positioned Korea as Asia’s leading medical tourism hub.

The Chinese stock market rose 37% this year, marking its best performance in four years. Despite trading at lower forward price-to-earnings ratios than developed markets, China is expected to see solid earnings growth. Franklin Templeton projected that China will continue to drive innovation in technology and consumer goods industries, noting that its venture capital market is the world’s second largest after the United States.

Dina Ting, Head of Global Index Portfolio Management, stated, “As emerging markets regain leadership in global growth, the key question is not whether to invest in emerging markets, but which emerging market countries to invest in.”

She added, “Korea is an attractive investment destination at the intersection of global industry, culture, and healthcare. To achieve results through single-country ETFs, it is crucial to carefully select the target country.” She emphasized, “Korea and China are markets that may offer opportunities that could be missed by funds investing broadly across regions.”

This content was produced with the assistance of AI translation services.