Sharp Rise in Raw Material Prices... Dividend Arbitrage Trading Offers Hope

[Asia Economy Reporter Hwang Junho] As the U.S. tapering (asset purchase reduction) is expected to materialize next month, and commodity prices continue to rise, analysts suggest that it is time to pay attention to dividend arbitrage trading.

Kim Seong-no, a researcher at BNK Investment & Securities, stated in the weekly report "Gabroneunbak (LEVES)" on the 24th, "It is difficult to find immediate momentum for stock price increases," adding, "The only hope until the end of the year is the dividend investment opportunity arising from net profit growth."

From a liquidity perspective, the likelihood of U.S. tapering becoming a reality is high. This is likely to also prompt an increase in South Korea's base interest rate. Liquidity contraction due to interest rate hikes is negative for the stock market.

From an economic indicator perspective, the OECD U.S. leading economic index, which entered a slowdown phase in July, is likely to decline further. Additionally, unlike the U.S. in the last quarter, earnings surprises on South Korea's KOSPI have decreased. Consequently, the forward 12-month price-to-earnings ratio (PER) of the KOSPI has fallen to 11.1 times.

Researcher Kim analyzed, "From an investment sentiment perspective, amid continued weak economic indicators from the U.S. and China, the sharp rise in international commodity prices is expected to lead to deterioration in South Korea's trade balance, foreign exchange market instability, consumer price increases, and worsening terms of trade, resulting in poor corporate earnings," adding, "In a phase of rising commodity prices, the overall investment attractiveness of South Korea's stock market deteriorates."

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