Martin Hutchinson, who up to now has been bullish on Japan, says Fukuda’s resignation is bad news for Japan’s near-term economic prospects.

However, Martin says there’s another Asian market that’s well worth a look: Korea.

Martin says the iShares MSCI South Korea Index Fund (NYSE:EWY) is good value now at a multiple of 10.3.

This from Money Morning:

Japan’s public sector is likely to grow again, as it did in the 1990s, producing larger Japanese budget deficits, packing on more debt and stifling private sector development. Since Japan’s public debt is already so high, the chances are good that the country’s debt rating of AA (Standard & Poor’s) /Aa3 (Moody’s Investors Service (MCO) will be downgraded. That would increase borrowing costs for all Japanese companies and damage the economy badly.

For more than a year, I had been positive on the Japanese economy, even as the market declined. But it’s finally time for a shift in outlook:

• In the near term – until the political situation can be sorted out – it’s better to underweight Japan in our portfolios.
• Long-term, however, we still believe that Japan is superbly positioned to capitalize on its proximity to China; indeed, as we’ve noted, the two countries are quietly forming what may one day well be the most powerful trading alliance on the planet.

In the meantime, until it becomes clear that this China-Japan connection can pump up the Japanese economy, there’s another Asian market – one of the “Four Asian Tigers” – that’s clearly worth a look as an alternative.

And that market is Korea.

Korea’s Profit Promise

The Korean government recently improved with the election of president Lee Myung-bak and a pro-business party with a substantial majority. Korea’s economic growth is likely to accelerate, particularly if we have seen the worst of the commodity and energy bubble, since Korea is primarily an importer of commodities and energy goods.

The Korean stock market has been beaten down this year, dropping 20%, and currently trades at only ten times earnings. But this low valuation is undeserved, since the Korean economy is expected to grow at better than a 4% clip for both this year and next, according to the respected global-economics magazine The Economist.

Take a look, for example, the iShares MSCI South Korea Index Fund (NYSE:EWY), which tracks the Morgan Stanley Capital International Korea index. The ETF currently carries a P/E ratio of 10.3 and features a dividend yield – after expenses – of about 1.9%.

Source: As Japan’s Economic Sun Sets – Albeit Temporarily – Look to Korea as an Asian Profit Play

Light sweet curde oil futures on the Nymex fell $1.19 dollars to $143.30 dollars a barrel. The contract is down from $147.27 dollars on Friday.

What if oil drops even further? Say back down to the $100 mark. Justice Litle says smart investors should condsider Asian stocks and Asian ETFs… 

When thinking about a possible market scenario — an outcome, a turn of events, or what have you — always try to ask yourself, “cui bono?”

Here is my hunch: If crude registers a huge drop out of left field, the major benefactor will be Asia… which means Asian stocks and ETFs could skyrocket.

For example, check out the South Korea ETF chart below.

South Korea is representative of most all the Asia ETFs (Malaysia, China, Taiwan and so on). Asia as a region has been badly beat up this year by the high and rising price of oil.

Asia’s worries over $140 crude are at least threefold: The high cost of fuel contributes to local inflation (a serious problem); the cost of fuel subsidies takes a big bite out of government budgets; and the higher cost of transport (thanks to fuel again) cuts mercilessly into export profits.

Waiting for the Miracle

This all explains why South Korea is off by a third from last year’s highs. There is fear that the “Asian Miracle” could be derailed by too expensive oil.

The miracle won’t be stopped, in my opinion, even if the price of oil stays sky high. There is just too much dynamism, too much determination and too much at stake. Expensive crude just makes Asia’s road a little tougher, that’s all.

But again, here’s where “cui bono” comes in.

Because there is so much concern… because so many are wringing their hands over Asia’s high-priced-energy troubles… a big drop in the price of crude oil could turn depressed Asian markets into a coiled spring.

Or maybe think of it like a strong but struggling hiker, laboring to carry on with a backpack full of rocks. If crude falls sharply, the backpack suddenly gets lighter. Gloom lifts and a second wind returns.

So would I go short crude oil right now? Probably not. There could be some short-term money in it — perhaps with a limited-risk put options trade — but that move is just a little bit too cute for me.

I would, however, take a hard look at the Asian country ETFs. They’ve all been beaten like a red-headed stepchild by crude’s rise… they’re all very cheap in comparison to three or six months ago… and they could all see a massive resurgence if crude breaks open to the downside.

Source: What If the Price of Oil Implodes?