While Samsung rides high, EWY looks vulnerable


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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 Nasdaq, Inc.

This article appears in: Investing , Stocks

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