Randel (Randy) Freeman, Co-Head of GAM Alternatives, explores why Korea may be the most interesting market in the world right now for event-driven and deep value investors, and why he believes it could follow a similar path to Japan’s transformation a decade ago.
26 August 2025
In a world where capital often chases the familiar, Korea stands out as potentially one of the most overlooked and undervalued markets globally. Long associated with structural inefficiencies, complex corporate governance and persistent valuation discounts, Korea has historically been underrepresented in global portfolios. But that seems to be changing, and fast.
Today, Korea offers a rare combination of deep value, structural reform and clear catalysts. With the launch of the Value-Up Program in 2024 (which seeks to boost the value of its listed companies by enhancing corporate governance and market practices), inspired by Japan’s successful Stewardship Code, Korea is embarking on a multi-year journey to unlock shareholder value and modernise corporate governance. The parallels to Japan a decade ago are striking, and the opportunity set may be even more compelling.
Opportunistic Positioning in Korea
Korea stood out to us due to a combination of political instability, weak corporate governance and depressed valuations, trading at just 0.8 times book value (0.8 P/B ratio)1. While we do not run a macro strategy, macro thinking helps us identify where to seek ideas and guide our positioning. These macro signals prompted a deep dive and ultimately, significant investment.
This is a good example of the essence of our approach: opportunistic, event-driven, and guided by macro awareness, deep fundamental work and disciplined trade structuring. It is what allows us to find value where others are often not looking, across all market cycles.
Korea: The next Japan?
We believe Korea today is where Japan was a decade ago — undervalued, under-researched and ripe for change.
Chart 1: Global indices percentage (%) breakdown by price-to-book value (P/BV) valuation
Source: Bloomberg, Samsung Securities, GAM, as at April 2025.
Korea has emerged as one of the most compelling opportunities in global markets today, in our view. Chart 1 illustrates the stark valuation gap: as of April 2024, nearly 65% of Korea Composite Stock Price Index (KOSPI)-listed stocks were trading below 1x price-to-book (P/B), compared to just 6% in the S&P 500. This deep discount, often referred to as the “Korea Discount”, is both structural and cyclical, and it is now being directly addressed.
In February 2024, Korea’s Financial Services Commission (FSC) and the Korea Exchange (KRX) launched the Value-Up Program2, a multi-year initiative inspired by Japan’s Stewardship Code. Its goal: to enhance shareholder value and improve corporate governance. Like Japan’s reforms, the programme encourages voluntary adoption of governance improvements and long-term value creation targets. The political backdrop is supportive, with strong cross-party alignment and high retail investor participation – 15 million shareholders3,4 accounting for 60% to 70% of annual trading volume5.
With Lee Jae-myung newly elected as Korea’s president in June 2025 and political stability likely to return, the reform momentum is expected to continue. Korea is still in the early stages of this transformation, but the direction of travel seems clear. The opportunity set is vast. Korea can potentially offer a large, investable universe of complex holding companies and deeply discounted structures. Many holding company discounts remain at or near historically wide levels, arguably among the most extreme globally.
For investors seeking deep value with hard catalysts, Korea today offers a rare combination of mispricing, reform and re-rating potential. And we believe this is just the beginning.
As market neutral as possible
Our goal is to remain as market neutral and uncorrelated as possible. We aim to achieve this through a combination of thoughtful hedging, broad geographic and sector diversification, and a wide mix of strategies. The aim is to deliver returns that are independent of broader market direction, minimising correlation to indices or other funds. While we monitor net and beta exposures, interpreting them in an event-driven portfolio is often more art than science. Many of our positions, such as merger arbitrage, holding company spreads or share class trades, may appear to carry high gross or net exposure, but in reality, they involve tightly linked securities with minimal market sensitivity.
What do we trade?
We trade across a wide spectrum of instruments with a highly flexible, opportunistic mandate. While the core of our portfolio remains equity-focused, we can express our global views through a diverse set of securities, wherever the opportunity lies. We do not take directional views on assets like Bitcoin or copper, but we do hold positions that are exposed to them. For example, we have traded MicroStrategy, hedged with Bitcoin, and hold SBI Holdings in Japan, which has significant exposure to Ripple Labs. In these cases, we may hedge with crypto-linked securities. Similarly, we have held copper-related equities and hedged them using copper futures.
On the long side, our positions are typically in equities. But on the hedging side, we use a wide range of tools – futures, options and other derivatives, to isolate idiosyncratic risk and construct non-market-correlated return streams. The result is a portfolio that looks very different from traditional equity funds. We believe it is a truly global, unconstrained and differentiated approach to event-driven investing, designed to uncover value where others are not looking.
Fully hedged, isolating alpha
We are not taking a directional view on Korea, or indeed any market. While we have meaningful exposure to Korean names, the portfolio is fully hedged. Our positions are driven by specific catalysts, not market beta. Whether it is M&A, holding company arbitrage, share class spreads or bombed-out value names, we are focused on isolating alpha through idiosyncratic trades. The broader portfolio follows the same philosophy. Most of our positions are structured around arbitrage strategies with defined outcomes – merger deals with fixed spreads, holding company discounts or share class mispricing. These are largely independent of market direction and designed to deliver returns regardless of macro conditions.
We aim for near-zero correlation to equity indices or bonds. We monitor beta and net exposure, but in event-driven investing, those metrics are often imperfect. Many trades appear to carry gross exposure but are tightly linked and market-neutral in practice.
Ultimately, our objective is to build a portfolio that functions across all environments. It is not about predicting markets, it is about having the tools and flexibility to generate returns in virtually any scenario, without relying on directional bets.
Randel Freeman is Co-Head of GAM Alternatives, overseeing the firm’s alternative investment capabilities.
1Source: Bloomberg, Korea Composite Stock Price Index (KOSPI) price to book (P/B) ratio=0.8, as at April 2025.
2Source: Financial Services Commission of Korea, 26 February 2024. https://www.fsc.go.kr/eng/pr010101/81778
3Source: Shery Ahn, Bloomberg, Fortune. Activist retail investors take on Korea’s corporate laggards, 9 June 2025. https://fortune.com/asia/2025/06/09/retail-investors-korea-discount-kospi/
4Source: United Nations, as at 2024. https://data.un.org/en/iso/kr.html
5Source: You, W., Ryu, D., & Webb, R. I. (2025). Retail investors and herding behaviour in the Korean market. Applied Economics, 1–15. https://doi.org/10.1080/00036846.2025.2515297
2Source: Financial Services Commission of Korea, 26 February 2024. https://www.fsc.go.kr/eng/pr010101/81778
3Source: Shery Ahn, Bloomberg, Fortune. Activist retail investors take on Korea’s corporate laggards, 9 June 2025. https://fortune.com/asia/2025/06/09/retail-investors-korea-discount-kospi/
4Source: United Nations, as at 2024. https://data.un.org/en/iso/kr.html
5Source: You, W., Ryu, D., & Webb, R. I. (2025). Retail investors and herding behaviour in the Korean market. Applied Economics, 1–15. https://doi.org/10.1080/00036846.2025.2515297
Important disclosures and information
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. Specific investments described herein do not represent all investment decisions made by the manager. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future. No guarantee or representation is made that investment objectives will be achieved. The value of investments may go down as well as up. Investors could lose some or all of their investments.
The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Korea Stock Exchange of the Korea Exchange. It is the representative stock market index of South Korea, analogous to the S&P 500 in the United States. The Nikkei 225, or the Nikkei Stock Average, more commonly called the Nikkei or the Nikkei index, is a stock market index for the Tokyo Stock Exchange. It is a price-weighted index, operating in the Japanese Yen, and its components are reviewed twice a year. The Taiwan Stock Exchange (TWSE) Capitalization Weighted Stock Index, or TAIEX is a stock market index for companies traded on the Taiwan Stock Exchange. The STOXX Europe 600, also called STOXX 600, SXXP, is a stock index of European stocks designed by STOXX Ltd. This index has a fixed number of 600 components representing large-, mid- and small-capitalisation companies among 17 European countries. The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in indices which do not reflect the deduction of the investment manager’s fees or other trading expenses. Such indices are provided for illustrative purposes only. Indices are unmanaged and do not incur management fees, transaction costs or other expenses associated with an investment strategy. Therefore, comparisons to indices have limitations. There can be no assurance that a portfolio will match or outperform any particular index or benchmark.
This article contains forward-looking statements relating to the objectives, opportunities, and the future performance of the equity markets generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
This disclosure shall in no way constitute a waiver or limitation of any rights a person may have under such laws and/or regulations. In the United Kingdom, this material has been issued and approved by GAM London Ltd, 8 Finsbury Circus, London EC2M 7GB, authorised and regulated by the Financial Conduct Authority FRN 122330.
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. Specific investments described herein do not represent all investment decisions made by the manager. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future. No guarantee or representation is made that investment objectives will be achieved. The value of investments may go down as well as up. Investors could lose some or all of their investments.
The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Korea Stock Exchange of the Korea Exchange. It is the representative stock market index of South Korea, analogous to the S&P 500 in the United States. The Nikkei 225, or the Nikkei Stock Average, more commonly called the Nikkei or the Nikkei index, is a stock market index for the Tokyo Stock Exchange. It is a price-weighted index, operating in the Japanese Yen, and its components are reviewed twice a year. The Taiwan Stock Exchange (TWSE) Capitalization Weighted Stock Index, or TAIEX is a stock market index for companies traded on the Taiwan Stock Exchange. The STOXX Europe 600, also called STOXX 600, SXXP, is a stock index of European stocks designed by STOXX Ltd. This index has a fixed number of 600 components representing large-, mid- and small-capitalisation companies among 17 European countries. The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in indices which do not reflect the deduction of the investment manager’s fees or other trading expenses. Such indices are provided for illustrative purposes only. Indices are unmanaged and do not incur management fees, transaction costs or other expenses associated with an investment strategy. Therefore, comparisons to indices have limitations. There can be no assurance that a portfolio will match or outperform any particular index or benchmark.
This article contains forward-looking statements relating to the objectives, opportunities, and the future performance of the equity markets generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
This disclosure shall in no way constitute a waiver or limitation of any rights a person may have under such laws and/or regulations. In the United Kingdom, this material has been issued and approved by GAM London Ltd, 8 Finsbury Circus, London EC2M 7GB, authorised and regulated by the Financial Conduct Authority FRN 122330.