[COVID-19 Great Transformation] Major Investment Paradigm Shift... Even If You Can't Go Abroad, You Buy Overseas Stocks

Global Investment Selection Star
Rising Demand Expected for Mid-Risk Products like ETFs
Predictions Favor Physical Assets Such as Gold and Dollar

Next-Generation Leaders Are 'IT, Software'
Early Reflection of Next Year's Earnings, Strong Performance Expected in Second Half
Preference for US Stocks Over China in Overseas Markets

[Asia Economy Reporter Oh Ju-yeon] The investment landscape has rapidly changed since the outbreak of the novel coronavirus infection (COVID-19). In the era of ultra-low interest rates around 1%, market liquidity has become abundant, but funds that had been concentrated in real estate due to strong government regulations have lost their direction. The surge in investor deposits from the existing 20 trillion won range to 47 trillion won occurred after the variable of 'COVID-19' emerged. Based on unleashed liquidity, market funds began a 'money move' from real estate to financial assets. During the KOSPI crash, individual investors swept up large domestic stocks including Samsung Electronics. Thanks to their aggressive accumulation, known as the 'Donghak Ant Movement,' the index has now approached the 2000 level.

The future market focus is on the 'post-COVID' era. With forecasts that COVID-19 will accelerate the untact culture and the 4th Industrial Revolution, 17 heads of research centers at securities firms were asked to identify promising investment destinations, leading industries, and changes in capital flow.

◆ Post-COVID, Stocks Are the Most Promising = A recent survey conducted by Asia Economy Newspaper among 17 research center heads at domestic securities firms found that 14 of them selected 'stocks' as the most promising investment destination after COVID-19. Given the expectation that the ultra-low interest rate and low growth phase will continue for some time, the stock market is seen as the best place to expect returns from growth industries. Demand for medium-risk, medium-return products such as exchange-traded funds (ETFs) and dollar-denominated bonds is also expected to increase. Seo Cheol-su, head of the Mirae Asset Daewoo Research Center, said, "There is a strong possibility that assets will move to the financial market due to the impact of strong real estate measures," adding, "The key is to hold good assets diversified over the long term, and especially, diversifying into global top-tier assets rather than focusing only on domestic ones will make a huge difference later."

After COVID-19, the expected KOSPI band for this year was forecasted to be 'a minimum of 1650 and a maximum of 2300.' However, until April, the global stock market rebound was rapid due to policy responses from various countries, but from May onwards, the timing of economic activity normalization may differ by country, so a more cautious approach was taken. While Daishin Securities viewed the short-term slowdown in May as a process of digesting supply for a second rise and expected the KOSPI to reach 2200, Kiwoom Securities and Kyobo Securities set the KOSPI upper limit at 2100-2200 but anticipated that the pace of economic recovery would slow toward the end of the year, potentially reducing the rise.

Some predicted that physical assets such as gold or dollar-denominated bonds, and long-term real estate, could attract attention. This is because concerns about economic uncertainty remain mixed, leading to increased hedging demand. Jeong Yong-taek, head of the IBK Investment & Securities Research Center, analyzed, "After May, the stock market will weigh more on declines than rises," adding, "Liquidity injected worldwide will support the prices of physical assets such as real estate and gold."

◆ Leading Stocks Beyond Semiconductors and Software = When limiting investment destinations to the securities market, what will be the next-generation leading sectors driving the stock market after COVID-19? Among the stocks commonly mentioned by the 17 center heads, 'IT and software' (11 people) was the most dominant. This is because these sectors form the core of economic stimulus measures promoted by major global countries. These industries are expected to become leading stocks accelerating the 4th Industrial Revolution cycle due to the untact trend, increased demand related to 5G, China's seven new infrastructure policies, Korea's New Deal policy, and the expansion of IT infrastructure investments in the US and Europe.

'Semiconductors,' centered on Samsung Electronics and SK Hynix, also attracted attention as IT investments delayed by COVID-19 resume, benefiting from pent-up demand. There is an analysis that stock prices could strengthen in the second half of the year, which can pre-reflect next year's earnings. The expectation of strengthened shareholder return policies was also positively evaluated.

Above all, the sector highlighted as a beneficiary after COVID-19 was 'healthcare' (5 people). This is because interest in disease response, stable supply of pharmaceuticals, and medical services is expected to expand. Noh Geun-chang, head of Hyundai Motor Securities Research Center, diagnosed, "Investment in healthcare stocks with high actual benefits such as diagnostic kits is promising."

Among countries where the proportion of overseas stocks could be expanded, the US was chosen over China. As of early May, domestic investors' overseas stock trading volume was about 50 trillion won, already exceeding last year's total. Fourteen center heads selected the US as the most promising overseas country, citing that global top companies are concentrated there and that retaliatory demand expansion after COVID-19 will be reflected the fastest. The most frequently mentioned promising stocks were Amazon, Microsoft, and Alibaba. Tesla, Alphabet, Nvidia, and Google were also cited.

◆ The Two Faces of Ants... Diverse Investors Mixed = Regarding individual investors' stock investments attracted to the stock market after COVID-19, it was emphasized that this should not be seen as 'speculation' but as an inflow of 'smart money.' Investment patterns are shifting from short-term to long-term, and there is a tendency to pursue both high returns and stability, broadening the spectrum.

According to the Korea Financial Investment Association, as of the 13th, investor deposits, which are standby funds for the stock market, reached 42.73 trillion won. Last year's monthly average investor deposits were around 24 to 25 trillion won. Then, in December last year, it increased to 27 trillion won, 28 trillion won in January this year, exceeded 31 trillion won in February, and surged to 47 trillion won by April 1. The fact that individual investors' stock market investment funds increased by 20 trillion won is evaluated as a 'natural investment behavior seeking high returns in a low-growth era.' However, caution was advised regarding the recent activation of index trading using ETFs amid sharp fluctuations in the KOSPI index and crude oil prices.

Shin Dong-jun and Yoo Seung-chang, heads of KB Securities Research Center, emphasized, "When a specific index or product price falls sharply unconditionally, related ETFs attract supply and demand, but a reasonable target level for the index's low and high points should be set first," adding, "We hope smart ants do not turn into moths to a flame."

This content was produced with the assistance of AI translation services.