3 Low-Cost Markets for Value-Conscious Investors: Baidu.com, Inc. (ADR) (BIDU)

3. South Korea
The South Korean market isn’t all that far from a record, with the Kospi just 10% or so below its all-time high. But valuations in South Korea are extremely low, as stocks fetch between eight and nine times earnings right now. Although some analysts point to stingy dividend payout rates as a reason for the valuation discount, Korea nevertheless has huge growth potential, especially in light of regional strength from neighboring China.

One interesting trend that has brought Korea into the forefront is an index switch by Vanguard. By shifting its emerging-market benchmark from a Msci Inc (NYSE:MSCI)-managed index to one created by FTSE, Vanguard’s emerging-market funds will eliminate their South Korean exposure.

But one reason that Korea may have stayed so inexpensive is that few of its stocks trade on major U.S. exchanges, including giant Samsung. Relying on iShares MSCI South Korea is a reasonable way to get exposure to South Korea while the market is still relatively cheap.

Get value
If U.S. stocks seem too expensive, jumping into cheaper foreign markets deserves consideration. The risks can be much greater, but for the right returns, that risk may well be worth taking.

The article 3 Low-Cost Markets for Value-Conscious Investors originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu.

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