“We are turning more positive on the country overall on the extremely cheap valuation,” said David Gaud, a Hong Kong- based senior money manager at Rothschild, which oversees about $157 billion. Korean shares may return 20 percent in the next six months, he said. “The global cycle overall should improve and Korea should be an interesting proxy.”

‘Very Rare'
The last time South Korean stocks were this inexpensive compared with global equities was January 2007, when the Kospi jumped 42 percent in six months and outperformed the MSCI All- Country index by 36 percentage points, monthly data compiled by Bloomberg show. The benchmark gauge for South Korea's $1.1 trillion market trades at an 18 percent discount versus its average price-to-book ratio of 1.2 during the past decade

Eoin Treacy's view The Asia Dollar Index has dropped back to test the lower side of its more than two-year range. The Index's short-term oversold condition mirrors the oversold condition evident on a number of the region's stock markets where potential for some steadying is increasing in what is an uncertain environment overall.

Against this background South Korea's relative performance has stood out. The Won has also been mostly rangebound for the last few years and has been particularly steady over the last few months. The Kospi Index has also been mostly rangebound, but found support above its June low last week and a sustained move below 1840 would be required to question current scope for additional higher to lateral ranging.

Among some of South Korea's more internationally oriented companies Kia Motors (P/E 12.32, Est. P/E 6.63, DY 1%) found support in the region of KRW50,000 from February and has held a progression of higher reaction lows since April.

Hyundai Motors (P/E 13.02, Est. P/E 6.05, DY 0.79%) has also held a progression of higher reaction lows since April and has rallied to break the previous yearlong downtrend.

Samsung Electronics (P/E 10.32, DY 0.61%) pulled back sharply in June but found at least near-term support in the region of KRW1.2million and a sustained move below that level would be required to question potential for additional upside. Samsung also has a UK listed on the International Exchange.

On clicking through charts for the Autonomies this morning, the above three shares stood out because they have already posted declines and experienced valuation contraction. What was perhaps more relevant is how many US and European shares have pulled back to test their 200-day MAs and have yet to demonstrate a return to demand dominance.

Kimberly Clark (Est. P/E 16.29, DY3.42%) stood out as an example. The share found support in the region of the 2003 lows in early 2009 and rallied impressively to post new all-time highs by early 2012. It had become quite overextended relative to the 200-day MA by March and has now pulled back to test the region of the 200-day MA, posting its largest reaction in more than four years in the process. A clear upward dynamic will be required to indicate a return of demand in this area but even then the most likely scenario is for a period of support building which could stretch into the medium term.