[Weekly Market Outlook] Focus on Q3 Earnings Over US-Originated Volatility

[Asia Economy Reporter Oh Ju-yeon] Ahead of the US presidential election in November, market volatility may increase, but there is an analysis that earnings stocks could show relatively solid performance, drawing attention. Since the KOSPI quarterly operating profit for Q3 this year is expected to show an increase compared to the previous year for the first time in eight quarters, interest is focused on sectors and stocks that will lead the earnings recovery.

According to Daishin Securities on the 11th, based on consensus, operating profit and net profit for Q3 this year are expected to increase by 22.2% and 34.2% respectively compared to the previous year.

Kim Ji-yoon, a researcher at Daishin Securities, diagnosed, "Ahead of the Q3 earnings season, the upward revision of operating profit consensus continues, so it is highly likely that KOSPI operating profit will meet the current consensus." She emphasized the need to pay attention to sectors and companies with earnings turnarounds as the earnings season approaches.

Researcher Kim said, "Among sectors that turned from a decrease in growth rate in Q2 to an increase in Q3 compared to the previous year, earnings growth is expected to continue into Q4 and 2021. The sectors with upward revisions in earnings consensus over the past month are display, automobile, machinery, chemical, non-ferrous metals, and IT home appliances."

NH Investment & Securities presented the expected KOSPI band for next week as 2350?2450. Factors driving the rise include abundant market liquidity, the possibility of easing the Korean major shareholder taxation household aggregation criteria, and expectations for the Q3 earnings season.

Kim Young-hwan, a researcher at NH Investment & Securities, said, "Big Hit Entertainment's general public offering subscription ended with a competition rate of 607:1 and subscription deposits of 58.4 trillion KRW." He added, "Considering that 27% of the subscription deposits, 15.7 trillion KRW, flowed into customer deposits immediately after Kakao Games' listing, customer deposits are expected to increase significantly."

Along with this, although the 2021 stock capital gains tax major shareholder requirement will be strengthened to 300 million KRW, the possibility that 'household aggregation' may switch to 'individual basis' could also have a positive impact on the stock market.

However, political uncertainty originating from the US is a factor that could increase market volatility.

Nevertheless, Researcher Kim explained, "Rather than reacting overly sensitively to US news flow, it is necessary to focus on the more certain factor of Q3 corporate earnings." He added, "Ahead of the US presidential election, the US news flow may be confusing, and such factors are more likely to act as factors increasing volatility rather than providing consistent direction to the market."

Regarding Q3 earnings improvement hopefuls, he analyzed, "Securities stocks supported by active individual funds' stock trading, US export stocks (automobiles, IT home appliances, IT hardware, semiconductors) benefiting from the US economic recovery, and materials and industrial goods (transportation, construction, steel) showing expectations of an industry turnaround are central."

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