[Good Morning Stock Market] Focus on Earnings After COVID-19... Expect Differentiation by Stock

[Asia Economy Reporter Oh Ju-yeon] On the 9th (local time), the U.S. stock market fell due to concerns that the resurgence of COVID-19 could lead to a widespread decline in individual companies' earnings. The Dow Jones Industrial Average dropped 1.39%, and the S&P 500 index fell 0.56%. However, the Nasdaq index rose 0.53%, marking its second consecutive day at an all-time high (15,547.75). While companies with high potential for earnings improvement succeeded in rebounding, those suffering from COVID-related earnings declines showed weakness, which has significant implications for the domestic stock market. This is why there is analysis suggesting a concentration based on earnings may emerge.

◆ Han Dae-hoon, SK Securities Researcher = The earnings season began with Samsung Electronics’ preliminary Q2 earnings announcement. Samsung Electronics announced an operating profit of 8.1 trillion KRW for Q2, significantly exceeding market expectations, signaling the start of the earnings season. However, expectations for the earnings season are not high. The estimated net profit for Q2, which was projected to reach 24.1 trillion KRW at the beginning of the year, has been revised downward to 20.5 trillion KRW.

Fortunately, the downward revision of profit estimates has slowed, and a rebound in profit estimates is appearing mainly in semiconductors, telecommunications, healthcare, and IT software (ITSW). These sectors are expected to experience accelerated concentration as they benefit from COVID-19 and policy expectations simultaneously.

◆ Seo Sang-young, Kiwoom Securities Researcher = The U.S. stock market saw increased volatility, with the Dow dropping more than 2% intraday. Particularly, when Dr. Fauci, director of the Allergy and Infectious Diseases Institute, stated that some states with a sharp rise in new COVID-19 cases should seriously consider another economic shutdown, the decline widened. This week, the daily number of new COVID-19 cases increased by 20.3% compared to last week, continuing the surge, and many regions are experiencing emergency room saturation. The World Health Organization (WHO) also expressed concern, announcing that COVID-19 is uncontrolled and worsening in many countries worldwide. Meanwhile, some investment firms claimed that earnings declines are expanding in COVID-affected sectors, including airlines, which contributed to the larger intraday drop in related companies and the U.S. stock market.

Meanwhile, Moody’s announced that online food sales will grow 35-40% in 2020-2021, with operating profit growth reaching 20% in 2020, leading related companies to rebound and driving strength in individual tech stocks. Additionally, U.S. Treasury Secretary Mnuchin’s announcement that a COVID relief bill will be created by the end of this month is also positive.

Considering this, a concentration based on earnings may also emerge in the Korean stock market, drawing attention. However, the prolonged possibility of a recession due to ongoing U.S. employment instability remains a burden, as it could still negatively affect foreign capital flows.

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