Recent inflationary pressures in Asia have led to tighter monetary policy. But one fund manager says Asian central banks are half-way to three-quarters of the way done with their interest rate hikes and that means investors will soon shift their focus away from inflation and towards growth. As a result, he is bullish on stocks in South Korea.
"I think it is a story of many industries producing fantastic earnings growth," Khiem Do, Head of Asian Multi-Asset at Baring Asset Management told CNBC on Monday, pointing to the positive growth momentum in the heavy machinery, shipbuilding, auto and technology sectors in Korea.
Echoing Do's bullish outlook for Korea, Credit Suisse noted in a recent report that the country has seen the strongest earnings upgrades among markets in Asia in the past month.
With the KOSPI trading at a forward price-to-earnings ratio of around 10, Do said Korea was relatively inexpensive.
"To us that's very good value for the growth we are able to see," he added.
Do's favorite sectors include industrials, consumer, energy and healthcare.
The Bank of Korea has hiked rates four times over the past 11 months, bringing the benchmark interest rate to 3 percent.
The moves have helped ease consumer price inflation (CPI), which fell to 4.2 percent in April from a 29-month high of 4.7 percent in March.