By Professor Eugene Yun (International Studies) 

 There is a popular magazine which picks a particular item and compares its price across different countries. I am often astounded by the price variation for the same good. For example, a bottle of my favorite Chilean wine in Seoul costs 43 percent more than in Singapore.
   Another magazine, The Economist, takes this idea and cleverly uses it to gauge whether a country's currency is overvalued or not. According to the Big Mac Index (based on the price of McDonald's famous hamburger) the Korean Won is overvalued by roughly 20 percent against the U.S. dollar.
   If you are a shopaholic like me, then you are constantly on the lookout for good deals. You also know that a good deal is finding something priced well below its true value.
   Good deals are hard to come by. This is because markets tend to work pretty well­or in technical jargon, efficiently.
   A stock investor's job is to shop around for bargain deals in the stock market. If that investor happens to be a global fund manager, then her job is to hop around the world, comparison-shopping in each market.
   The existence of global investors or cross-border investors means that Korean companies publicly traded in the stock market are scrutinized, measured and compared against all other publicly traded stocks in the world.
   How do we stack up in this global contest?
   The short answer, sadly, is: Not very well. Analysts believe that Korean companies are being sold at a discount to their true value. This phenomenon is called "Korea Discount."
   Another way of looking at this unpleasant phenomenon is as follows. Suppose there were two identical companies­one located in Korea and the other in Japan. Although identical in every respect, the Korean company would have a lower stock price compared to its twin in Japan.
   Needless to say, Korea Discount is not good and we would be better off if, instead of a discount, we enjoyed a Korea Premium. Samsung Economic Research Institute earlier this month tried to convince the nation that there was no such thing as a Korea Discount, but I was not convinced by their argument. They concede that there is a discount for Korean stocks, but they found this to be in line with the discount seen in other markets.
   When it comes to stocks, Korea is lumped in the emerging market category and so we understand Samsung? main point. Buying this argument, however, is nothing more than sweeping our problems under the rug.
   Ask any global investor and she will likely come up with a long list of reasons why Korean stocks are being discounted: problems with North Korea, unstable domestic politics, lack of globalization, corruption, over-reaching bureaucracy, market interference, lax financial market supervision, poor corporate governance, outdated labor laws, and so on.
   There is nothing to be gained by taking Korea Discount and re-naming it Emerging Market Discount. One key reason why we remain an emerging market country is because of Korea Discount. We should tackle the discount phenomenon head on and stop selling ourselves (and our companies) cheap.

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