[Good Morning Stock Market] "Positive Outlook on Mid-to-Long-Term New Industries... Short-Term Investment Opportunities in Old Industries"

[Asia Economy Reporter Eunmo Koo] Expectations for improvement in economic indicators have been rising since May. In particular, as economic activities resume and hopes for an economic rebound emerge, a notable rebound in sentiment indicators is expected. In the mid to long term, positive views on ‘NEW’ industries are maintained, but in the short term, it is analyzed that the trading appeal of ‘OLD’ industries may be highlighted.

◆Daehun Han, SK Securities Researcher=Due to the spread of the novel coronavirus infection (COVID-19), we have repeatedly witnessed devastating economic indicators that we had never faced before. The economic indicators for March and April confirmed over the past two months were generally sluggish. However, the economic indicators to be announced for May and beyond are expected to show slight improvements. Although economic indicators that need to be compared with last year will still be sluggish, a rebound in sentiment indicators is anticipated. The U.S. consumer confidence index for May has already succeeded in rebounding (April 85.7p → May 86.6p). Coupled with expectations for improved economic activities, it is judged from a macro perspective that the worst is over.

As countries expand their lockdown easing measures, expectations for an economic rebound through the resumption of economic activities are growing. As confirmed by the U.S. consumer confidence index, consumer sentiment improvement is also becoming visible. This psychological effect is being reflected in advance, accelerating the rebound speed of stocks that had been neglected. These correspond to stocks that were previously called ‘OLD’ stocks. It is unlikely that these industries will regain their past glory by establishing themselves as leading stocks. However, from a short-term trading perspective, this is a point in time when investment attractiveness can be highlighted.

The current market leaders are tech and platform companies and healthcare companies represented by ‘NEW’. SK Securities holds a very positive view of these in the mid to long term. The speed of these megatrends has accelerated further due to COVID-19. However, in the short term, it is a time when a counterattack from previously neglected industries can be expected. In fact, the net income estimates for the third and fourth quarters of the neglected industries are also rebounding. While maintaining a positive view of NEW industries in the mid to long term, investment opportunities can be found in OLD industries in the short term. From a short-term trading perspective, a new opportunity has come for OLD industries, and if a short-term pullback occurs in the NEW industries that have had large gains, it is recommended to take it as a buying opportunity.

◆Sangyoung Seo, Kiwoom Securities Researcher=On the 28th (local time), the U.S. stock market showed sectoral differentiation with healthcare, cloud, and software sectors performing strongly, while financials, retail, and energy sectors showed weakness amid rapid rotation. Additionally, it was characteristic that gains were given back toward the end of the session, reflecting strong profit-taking desires. In particular, considering that the strength of Workday, a factor behind the strength in cloud and healthcare sectors, and the record of 100,000 COVID-19 deaths had already been reflected in the Korean stock market the previous day, attention should be paid to weak U.S. economic indicators, the expansion of U.S.-China frictions, Micron’s decline, and the ASCO event.

Although U.S. economic indicators did not have a significant impact on the U.S. stock market, they showed a tendency of continued weakness, indicating that the economic slowdown is persisting, which is expected to negatively affect foreign demand. Furthermore, news that U.S. President Donald Trump is preparing a press conference related to Hong Kong on Friday has drawn attention to changes in the foreign exchange market due to the expansion of U.S.-China frictions. This could also affect foreign demand.

Meanwhile, Micron (-6.03%) surged the previous day on upward revisions to earnings forecasts but fell on the 28th due to concerns about increased inventory in the second half and weakening demand for server DRAM, which is expected to burden related stocks. Additionally, the healthcare sector showed strength in the U.S. stock market supported by the opening of ASCO (American Society of Clinical Oncology) from May 29 to June 2, which could also impact related domestic stocks, warranting attention. Considering these changes, the Korean stock market is expected to continue rapid sectoral and stock-specific rotations, resulting in a stock-specific market.

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