Pyongyang, North Korea, is home to the largest stadium in the world with a seating capacity of over

Pyongyang, North Korea, is home to the largest stadium in the world with a seating capacity of over 114,000. to release Chey Tae- Won accelerated the demise of her political career. Ironically, she finds herself in prison awaiting trial while the Korean stock market continues to trade at a discount to peers. In addition, MSCI Korea’s relative valuation is also suppressed by the mercurial behavior of North Korea whose recent missile tests have dominated global headlines. A truly embarrassing South Korean political scandal emerged in the fall of 2016 when a journalist discovered a computer belonging to a personal confidant of President Park Geun-Hye. The contents of the device, belonging to Choi Soon-Sil, revealed that she had access to confidential presidential documents including speeches that were ultimately altered and influenced by Ms. Choi Soon-Sil. In the weeks following this revelation, the mighty chaebols of Samsung, Lotte and SK were once again linked to the current political impropriety. It is alleged that members of these chaebols (among others) were coerced into ca ioe | saat = WE, i wine - et eee OD =| — ~~ | aa) ome) cme GS Source: Getty Images contributing large sums of money to a foundation established by Ms. Choi Soon-Sil in order to maintain a positive relationship with President Park Geun-Hye. The Korean stock market languished as a result of President Park Geun-Hye’s miscues as shown in CHART 2. The performance of the MSCI Korea Index starting from the beginning of President Park Geun-Hye’s term was down 25% by late August 2015, which coincided with Mr. Chey Tae-Won’s pardon in the week prior. The Korean market drastically underperformed the MSCI Asia ex. Japan Index which was down 14% and the MSCI ACWI Index which was up about 9% during that period. Korea's recursive political environment was frustrating for many Koreans. It is widely believed that chaebols sapped the entrepreneurial vigor of small business owners and young adults who were experiencing unemployment rates of over 9%. However, the decision to impeach President Park Geun-Hye on CHART 2: PERFORMANCE SINCE PARK GEUN-HYE INAUGURATION 130 120 110 100 We 90 NAY 80 yw? SK Chairman Pardoned 70 PESSTERP RSQ ST PSESSTERP KROES TE PESETER KOZ sce S 2 Fnunwveesesa Freese rz Nua veesaA Fe RFA HDA! A Np N ON NN NBN NYnwp NVQ On NUN NY BN Nn ND on NM NY NN eg<ssgsgeesezsee2zeses8rgeszsgezgeges8 Seggee2eeee8 wm wm Ww ww wioaw i pep RK eB Fg F BRA RF BY uaa gs uuu gna Ge = MSCI KOREA MSCl ACWI Me VISCI ASIA EX. JAPAN Source: Bloomberg GLOBAL FORESIGHT THIRD QUAPTEP 2017 141 HOUSE_OVERSIGHT_012089