While Samsung rides high, EWY looks vulnerable


We have been pounding the table on Samsung as the Apple ( AAPL , quote ) of the emerging world for awhile now. But the easiest way for U.S. traders to get into this story seems to be running low on steam.

[caption id="attachment_56209" align="alignright" width="220" caption="Vertical growth in Wangsimini, Seoul"] Image courtesy Taylor & Yumi: http://www.flickr.com/people/taylorandayumi/ [/caption]

The MSCI Korea ETF ( EWY , quote ) is up nearly 16% year to date, largely on the strength of Samsung  -- not to mention the general sense that this is a company that belongs in the same global elite bracket as Apple.

Samsung shares are up well over 23% over the same time period. The company has vast cash reserves, almost endless corporate partnerships and a toehold in practically every consumer electronics market.

Like Apple, Samsung arguably has a better credit rating than the country it inhabits. Apple has no long-term debt so it has no hypothetical bonds for the agencies to rate, but Samsung just launched a big bond offering at lower yields than the 3.5% to 4% that Seoul pays.

A note of warning, however. While Samsung may still look strong, institutional money has apparently started pumping back out of EWY. Net flows from the fund reportedly reached $52.5 million two weeks ago as investors redeemed 850,000 shares -- 1.5% of the entire portfolio.

If it continues, that kind of selling pressure may drag on Samsung as well as more humble shares within EWY. That, in turn, may present a buying opportunity.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , International , Stocks

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