AFTER years of favoring Asia’s faster-growing countries, investors are returning to South Korea to scoop up the region’s cheapest stocks.

    They’ve sent the market close to a record. The benchmark Kospi Composite Index is up 12 percent this year, and earlier this month hit its highest level in nearly four years. As of Tuesday’s close, it was 2 percent from the record high set in May 2011. Foreign buyers have helped fuel the gain, buying a net US$6.8 billion in South Korean stocks so far this year, more than in all of 2013 or 2014.

    Part of the allure for mutual-fund managers is simply that it’s less crowded. As valuations rise in the region — stocks rallied in India last year, and in China and Japan this year — South Korea’s market looks even cheaper than its peers on relative terms, attracting fund managers who have been underweight on the country.

    But another part is that South Korea, Asia’s fourth-largest economy, is home to businesses that play to the rising demand of Chinese consumers. Chinese tourists voted Seoul the best city for shopping in a poll last year by travel agent Ctrip.com International Ltd. South Korean brands are selling the Chinese products from beauty items to ramen and snacks and drinks, on top of electronics, automobiles and machinery.

    “South Korea’s been unloved for a long time” but rising numbers of tourists as well as a Bank of Korea interest rate cut in March are providing catalysts for the market’s rise, said Sam le Cornu, a senior Asia portfolio manager overseeing US$3 billion for Macquarie Investment Management. “People are playing the laggard catch-up in terms of buying into South Korea.” (SD-Agencies)