"KOSPI Stuck in a Trading Range for Two Months, Time to Focus on Earnings Stocks"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Heungkuk Securities forecasted on the 28th that although the domestic stock market continues to move within a box range, the upward trend in the stock market is unlikely to be broken considering the full-scale implementation of stimulus measures by major countries and the favorable improvement in corporate earnings.

Researcher Lim Seongcheol of Heungkuk Securities evaluated, "The KOSPI has been maintaining a box range movement from February to March amid various uncertainties such as the US Treasury bond yield issue, the resurgence of COVID-19 in the Eurozone, and conflicts between China and Western countries."

However, he explained that since the economy is still showing a solid recovery trend and considering the full-scale implementation of stimulus measures by major countries and the favorable improvement in corporate earnings, it is not judged that the upward trend in the stock market will be broken.

Researcher Lim forecasted, "If high stock prices were justified by expectations of recovery from the unprecedented COVID-19 situation from March last year to January this year, from now on, as we enter a full-scale economic recovery phase, a differentiated market by company supported by actual performance is expected to begin."

He advised that attention is needed toward sectors and stocks based on performance in this differentiated market. Heungkuk Securities identified energy, chemical, steel, construction, machinery, automobile, retail (distribution), IT hardware, and semiconductor sectors as the top sectors in KOSPI earnings revisions (corporate earnings adjustment rates).

Researcher Lim explained, "The sectors that satisfy the conditions of upward revision of operating profit for one month and three months this year, and upward revision of earnings compared to the previous year for this year and next year are energy, chemical, steel, construction, machinery, automobile, retail (distribution), IT hardware, and semiconductor sectors."

He added, "Among these, the sectors that satisfy the conditions of upward revision of operating profit for one month and three months in the first quarter, as well as continuous upward revision by quarter this year, are the chemical and semiconductor sectors."

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