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In South Korea, cosmetics are the new smart investment as heavy industry lags

Led by Amorepacific Corp. and LG Household & Health Care Ltd., makers of Korean beauty products are surging more than 100 times faster than the broader market and prompting the nation’s male-dominated investment world to rethink how it covers the sector.

Shinhan Investment Corp., part of the country’s largest financial group by market value, has deployed two analysts from its industrial team to focus on beauty research. The Korean unit of Daiwa Securities Co. hired a woman to initiate coverage of the industry last month, while Daishin Asset started a “female generation” fund in March in part to tap into growing prospects for the beauty sector.

The nation’s cosmetics sector is booming as the rising spending power of Asian consumers – particularly those from China – leads to an influx of tourists eager to mimic the look of Korea’s pop stars and on-screen celebrities. The industry’s rise is helping the USD1.4 trillion economy weather a downturn in manufacturing and shipbuilding industries that were once the nation’s biggest source of growth.