A declining yen has weighed on profit margins of manufacturers with the Japanese currency down about 18 percent against the won this past year. A lower yen makes Korean goods more expensive by comparison in global markets but Nomura isn't too worried about the future.
(Read more: Yen set for worst year since YMCA topped the charts)
"In our view, the significant depreciation of [the yen] due to Abenomics has largely come to an end. Thus, we are becoming more optimistic on the Korean auto sector, which has been hit the most among Korean sectors by the [yen's] depreciation."
However, not all analysts are quite as bullish on South Korea. The latest note from Barclays indicates the economy could be hit by politics in the near-term.
"The two parties in the National Assembly failed to conclude the passage of the proposed 2014 spending budget by its deadline on Dec. 2, 2013. As a result, there is a possibility the government could face an automatic reduction of its fiscal spending (the so called fiscal cliff) early next year. Concerns about government spending and political headwinds will dampen consumer sentiment and corporate investment as well, in our view," said Chanik Park, head of Korea research, Asia Ex-Japan equity research at Barclays.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter