"Liquidity Market to Continue for the Time Being... Need to Broaden Interest to Value Stocks"

Bearing Asset Management Untact Press Conference

[Asia Economy Reporter Minji Lee] Although the index quickly recovered after the shock of the novel coronavirus infection (COVID-19), concerns about the concentration in growth stocks have increased, leading to opinions that attention should be broadened to value stocks in the second half of the year.

Jonghak Park, CEO of Bearing Asset Management Korea Corporation

On the 2nd, Park Jong-hak, CEO of Baring Asset Management Korea, spoke about investment strategies for the domestic stock market in the second half of the year at an untact press conference themed "Investment Strategies to Overcome an Uncertain Market." He advised that although the liquidity-driven market will continue for the time being due to the unprecedented scale of liquidity injected, strategies must be prepared to respond to factors that could increase stock market uncertainty.

Park explained, "Although there is a gap with the real economy as the economic recovery is priced in advance, it is judged not to be an excessive bubble state," adding, "With the reopening of economic activities in major countries worldwide, export indicators based on daily averages are also showing a recovery trend, so the stock market recovery is expected to continue." Currently, although the number of confirmed COVID-19 cases is increasing domestically due to a resurgence, it is analyzed that the impact on the stock market will decrease if vaccines or treatments emerge.

One factor that could increase stock market volatility is the phenomenon of "wealth concentration" in specific stocks. Even among the top 10 stocks within the global representative MSCI AC index, most are growth stocks in IT, communication, and healthcare sectors. In the Nasdaq 100 market capitalization weighting, stocks belonging to FANG (Facebook, Amazon, Netflix, Google) or MAGAT (Microsoft, Apple, Google, Amazon, Tesla) accounted for 50%.

Park pointed out, "When wealth is concentrated, the government is likely to bring out cards such as antitrust measures, strengthening personal information protection, and environmental regulations," adding, "This is an important factor that can affect the business of growing companies." Other factors that could impact the stock market include trade conflicts between the U.S. and China, and the establishment of valuation standards for intangible assets due to IT and R&D investments.

Accordingly, he said it is advisable to increase investment proportions in dividend value stocks or long-term growth stocks when stock market volatility rises. Since the attractiveness of growth stock investments is already reflected in stock prices, it is burdensome to maintain further upward momentum, and interest in undervalued value stocks may increase amid economic recovery trends. Also, with the U.S. Federal Reserve (Fed) adopting dovish decisions and the dollar weakening, foreign investors are expected to focus on buying large-cap blue-chip stocks and cyclical stocks.

Park said, "Some value stocks also possess the attractiveness of growth stocks, such as digitalization," and added, "Comparing Google and Domino's Pizza, Domino's Pizza, which quickly applied delivery to its business, has delivered higher long-term performance than Google."

Representative Park explained, "Even in periods when the index fluctuates or moves sideways, investing through a systematic investment plan could achieve returns of around 3 to 4%."

Investing in companies with fundamentally promising business models is also positive. From a long-term perspective, investing in sectors expected to benefit from government New Deal policies and COVID-19, such as hydrogen vehicles, 5G, and bio-healthcare, can increase returns.

Park emphasized, "Although signs of liquidity withdrawal and the possibility of inflation must always be monitored, investing regularly in value stocks and long-term growth stocks from a mid- to long-term perspective can overcome market volatility," adding, "Even if the index moves sideways for a considerable period, regular investments can generate basic levels of returns."

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