'Performance-Driven Market Vroom Vroom' Second Half Focus on Automobiles... "Foreign Investors Already Targeting the Loose Stock Prices"

Foreigners' Auto Investment "Position Shift from Selling Dominance to Buying"
Promising Stocks Driving KOSPI's Second Half Rally Are Autos "Increasing Weight"

[Asia Economy Reporter Lee Seon-ae] Among the most promising sectors for the second half of the year, as selected by the majority of domestic securities firms' research centers, 'semiconductors' and undoubtedly 'automobiles' stand out. Investment advice is pouring in, emphasizing the need to focus on the currently loose stock prices and respond to the earnings-driven market in the second half. It is said that now is the time to increase weighting. In particular, while automobile stock prices have not shown significant movement, foreigners have continued buying automobile stocks since July, drawing attention.

According to financial information provider FnGuide on the 5th, the total operating profit forecast for the second quarter of 192 listed companies with consensus estimates from three or more securities firms increased by 13.1%, from 38.936 trillion KRW at the end of March to 44.0458 trillion KRW as of the first week of July. Among these 192 listed companies, 116 companies (60.4%) have upwardly revised their earnings forecasts over the past three months. This can be interpreted as meaning that many companies are likely to record earnings surprises, indicating that the second half will be an earnings-driven market.

In the automobile sector, the second-quarter operating profit forecasts for the representative finished car stocks Hyundai Motor and Kia are 1.8207 trillion KRW and 1.2931 trillion KRW, respectively, showing increases of 4.2% and 5.5% over three months.

Accordingly, earnings are expected to drive stock prices up. Although there were significant concerns about production disruptions due to a shortage of automotive semiconductors, profitability improvements have more than compensated for this. Jinwoo Kim, a researcher at Korea Investment & Securities, emphasized, "Although interest in parts suppliers has recently increased due to expectations of higher operating rates in the second half, it is now time to prepare for a second-quarter finished car earnings surprise," and advised "increasing weighting."

Jaeman Lee, a researcher at Hana Financial Investment, also explained, "Among sectors with higher price-to-earnings ratios than the KOSPI in the first half of this year, the proportion of operating profit within the KOSPI is expected to increase in the second half compared to the first half. Continuous attention is needed for the automobile sector, which has seen upward revisions in operating profit estimates for the second and third quarters."

It is also noteworthy that foreigners have been accumulating automobile stocks since July. Foreigners showed a net selling position of 509.6 billion KRW in Hyundai Motor from January 4, the first trading day of the year, to June 30. However, they have continued net buying since July. As of the 2nd, the net purchase amount was 52.198 billion KRW. This is the first time in about 20 days since June 10-11 that they have shown buying pressure for two consecutive days. Kia is also receiving foreign investors' love calls. Although foreigners net sold about 1.2625 trillion KRW until the end of last month this year, they have maintained buying pressure for two consecutive days since the 1st, purchasing 54.975 billion KRW worth of shares. Kyungmin Lee, a researcher at Daishin Securities, said, "If foreign demand improves, the turnaround in the automobile sector's sentiment is expected to strengthen the upward momentum of the KOSPI."

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