Private equity firm MBK Partners and Australia’ Macquarie Group have completed a $2 billion joint acquisition of South Korea’ second-largest cable television operator, C&M Co. Ltd.

The companies targeted the TV operator position because of South Korea’ sturdy and growing economy, which is quickly developing a taste for digital and broadband TV services, Reuters reported.  

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The Korea Broadcasting Commission approved the transaction in late February.

C&M has more than 2 million cable TV subscribers, accounting for more than 40% of South Korea’ population, the companies said in a joint statement.

However, the country has about 100 cable operators. And analysts expect regulations for operators’ coverage to ease, which would make it easier for investors such as MBK and Macquarie Group to gobble up more of the market, Reuters reported.

At the minimum, Macquarie would be a likely candidate for more South Korea investments. 

Last year, it acquired the country’ top cinema chain, Megabox. It also bid for a major stake in broadband operator Hanaro Telecom Inc. (OTC:HANAY), but lost to SK Telecom Co. (SKM).

News and Related Story Links:

• Reuters:
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• Money Morning Investor Report:
  Why South Korea is set to Become the Biggest Economic Story of 2008

The sharp rise in the price of crude oil is a key culprit for South Korea’s record imports and rising consumer prices last month.

While exports rose a boisterous 20.2% to $31.5 billion, imports leaped 27.3% to a record $32.3 billion. Crude imports alone jumped 60% to $6.2 billion last month.

It marks the third straight month the country’s trade deficit has been in the red. December was the first in 57 months the country posted negative trade numbers.

And since South Korea imports 97% of its energy needs, consumers paid the price. The consumer price index rose 3.6% last month from the previous February and a 0.4% increase from January, according to Korea’s National Statistics Office. 

While prices rose almost completely across the board, transportation costs rose at the fastest rate, soaring 10.1%.

Investors Eye Export Strength

Given South Korea’s energy dependency, there was little it could do about soaring oil costs and the effect on the country’s economy.

However, South Korea’s export strength offset a potential economic imbalance, drastically improving the country’s trade deficit from $3.69 billion in January to $808 million last month.

Exports to the Association of Southeast Asian Nations – a 10-nation political and economic bloc comprised of the Philippines, Thailand, Indonesia, Malaysia, Singapore and others – rose 50.9% last month compared with the year prior.

Also, shipments to the Middle East rose 48.3%. Exports to Japan and China rose 10.1% and 6.1%, respectively.

"Despite the surge in crude oil imports, that cost $91.4 a barrel for the Dubai brand last month, increased exports of ships, machinery, processed oil products, display screens and mobile telecommunication equipment, helped reduce the size of the deficit," Oh Jung-kyu, head of the ministry’s trade and investment promotion bureau, said in a statement, the Korea Times reported.

This is great news for investors. Already in 2007, they’ve seen Korea’s stock market rise nearly 32%; faster than Singapore (17%), Australia (12%), Thailand (26%) and the Philippines (21%), according to The Associated Press. Comparatively, the blue-chip Dow Jones Industrial Average Index rose 6.77%, the tech-laden NASDAQ Composite Index gained 7.81% and the broader S&P 500 Index rose a meager 3.45%. Japan’s Nikkei 225 Index actually dropped 11%.

And Money Morning has a free South Korea investors’ portfolio that captures the country’s fast growth potential.

The report has details on South Korea’s largest bank, largest mobile phone carrier, largest steel maker and its major electric power company.

News and Related Story Links:

• Korea National Statistics Office:
  Consumer Price Index for February 2008

• Korea Times:
  S. Korea’s Trade Deficit Narrows in February

• Associated Press:
  Rollercoaster Asian stocks set to rise in 2008: analysts

• Money Morning Investment Report:
  Why South Korea is set to Become the Biggest Economic Story of 2008

Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman Warren Buffett yesterday (Thursday) paid his first visit to South Korea, where the billionaire U.S. investor has invested in 20 companies, including a 4% stake in the country’s Number One steelmaker, POSCO Ltd. (PKX), South Korea’s Yonhap news agency said.

In an email interview with Seoul-based Maeil Business Newspaper Sunday, the billionaire said South Korean stocks are still attractive, despite some analysts’ concerns that they may be overvalued.

"The Korean stock market a few years ago was by far the most undervalued market in the world," Buffett told the newspaper. "Since then, there has been a huge advance in the Korean market and the [Korean] won has appreciated against the dollar. Nevertheless, many Korean stocks still sell at more attractive prices than stocks in other major countries."

Buffett is the world’s second-richest man, with assets of $52 billion, according to Forbes magazine. His last major investment foray involved U.S. railroad companies.

[Editor's Note: Warren Buffett may well have just wised up on South Korea's potential, but we detailed that promise months ago. If you'd like to read our 6,000-word research report, “The Three Best Investments in Asia Today,” which includes detailed insights on Korea and other key markets, please click here. The report is free of charge.]
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• Money Morning Investment Analysis:
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• MarketWatch.com:
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