October with Increased Volatility, Market Eyes Shift from Q3 to Q4

[Asia Economy Reporter Oh Ju-yeon] With the U.S. presidential election just over a month away in November, concerns are rising about increased market volatility. However, the market is busy searching for 'solid earnings stocks' that can shine after a stock market correction. This is because there is an analysis that if the risk asset rally resumes from the fourth quarter, the domestic stock market will also show strength. It is expected that the trend of oversold and undervalued stocks and short-term earnings momentum will continue until the end of this year.

According to financial information provider FnGuide on the 1st, the estimated operating profit for the fourth quarter of this year for 249 listed companies, estimated by three or more securities firms, was 34.0356 trillion KRW. This represents a 50.34% increase compared to 22.6388 trillion KRW in the fourth quarter of last year.

Among the 249 companies, excluding 7 companies for which the year-on-year operating profit change rate was not identified, 159 companies showed an increase in operating profit compared to the same period last year. Only 50 companies saw a decrease in operating profit, showing a difference of more than three times.

Twenty-three companies are expected to turn profitable compared to the same period last year, and two companies are expected to reduce losses, meaning a total of 184 companies (73.90%) are projected to improve operating profit compared to the fourth quarter of last year.

All of the top 10 companies by market capitalization are expected to show an increase in operating profit in the fourth quarter compared to the same period last year.

With the strengthening of semiconductor earnings power, Samsung Electronics is expected to see operating profit of 9.3653 trillion KRW in the fourth quarter, a 30.8% increase, and SK Hynix is projected to increase by 346.7% to 1.0544 trillion KRW.

Naver and Kakao are expected to continue improving earnings in the second half, increasing by 75.5% and 74.1% respectively in the fourth quarter, and LG Chem is expected to turn profitable. Samsung SDI showed the most remarkable increase among the top 10 by market capitalization, with a year-on-year growth rate of 1343.4%.

Lee Jae-sun, a researcher at Hana Financial Investment, said, "The variable that determines success or failure in setting new highs during the KOSPI recovery process after the crisis is whether earnings increase or decrease compared to the previous year," adding, "The most important thing is whether we can transition from a liquidity-driven market to an earnings-driven market."

Kim Yong-gu, a researcher at Samsung Securities, said, "As an alternative momentum alpha strategy, it is necessary to look at Chinese consumer goods and oversold third-quarter and 2021 earnings stocks," adding, "There is no need to waste effort looking for Trump or Biden policy beneficiaries that are just shiny but hollow, or year-end dividend investments."

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