The Santa Rally Missing This Year Will Return Next Year

[Asia Economy Reporter Ji Yeon-jin] Although the second half of this year was particularly challenging for domestic stock investors, there is a forecast that the uncertainties pressuring the stock market will be resolved next year.

According to the financial investment industry on the 26th, this year's domestic stock market was held back by concerns over a peak in earnings due to the U.S. tightening cycle from a macro perspective and the economic slowdown in China. Domestically, the physical division of growth businesses and the weakening supply and demand of large-cap stocks due to new listings were identified as causes of the relative underperformance of the domestic stock market.

However, the Federal Reserve's (Fed) tightening clock in the U.S. is fixed, so no additional shocks are expected, and China is likely to use active economic stimulus measures at the March Two Sessions.

In the domestic market, the initial public offering (IPO) cycle of major large-cap stocks such as LG Energy Solution and Hyundai Engineering will conclude in the first quarter.

The impact of the Omicron variant spread on the market is also expected to be limited. Although the number of global confirmed cases is increasing, the number of deaths is not rising, and with the U.S. Food and Drug Administration (FDA) approval of oral COVID-19 treatments, the virus is likely to become controllable.

Samsung Securities named electric vehicles (jeoncha) groups, mobility, and bio CMO as the leading sectors next year. A temperature change is being sensed in the memory semiconductor market, which had predominantly negative forecasts, and Hyundai Motor Group is showing a full-fledged move into the electric vehicle market by abolishing its internal combustion engine research and development (R&D) organization.

This year, the stock prices of mobility companies, excluding battery materials, were relatively sluggish. In particular, LG Chem and SK Innovation saw their stock prices dragged down by issues related to the physical division of their battery subsidiaries. The recent discussion of institutional measures to protect the rights of existing shareholders affected by the re-listing of subsidiaries is considered a positive momentum. If LG Energy Solution is listed in January next year and emerges as a new leading stock, there is also a forecast that a revaluation of mobility companies overall?including batteries, materials, and automotive electronics?will take place.

This year, the bio sector was one of the most underperforming sectors. Growth stocks suffered due to rising interest rates, and the momentum of domestic companies slowed due to global vaccine and treatment development. Shin Seung-jin, a researcher at Samsung Securities, said, "However, the growth potential of bio pharmaceutical contract development and manufacturing organizations (CMOs) is open due to the emergence of the 'mRNA' market," adding, "Recent consecutive upward order announcements and expansion plans by our CMO companies prove this."

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