Weather Forecast for Traditional Large Liquor Brands in 2022

Semiconductor Sluggish This Year
Next Year D-RAM Price and Supply Stabilization
Samsung Electronics and Others Show Recovery Moves
Automotive Sector Stock Direction Escapes Slump Following Electric Vehicles
Steel Stocks Overcome China's Economic Momentum, Begin Earnings Improvement in Q2 Next Year

[Asia Economy Reporter Song Hwajeong] This year, traditional large-cap stocks failed to meet market expectations. After reaching an early peak, they showed a sluggish trend, displaying a "high start, low finish" pattern. Next year, it is expected that the industry conditions that hampered stock prices this year will improve, leading to a recovery in stock prices.

Semiconductors, Demand Recovery Expected

Samsung Electronics rose to an intraday high of 96,800 KRW at the beginning of the year, raising expectations for the 100,000 KRW mark. However, due to a cold wave causing shutdowns at U.S. factories and concerns about the industry, the stock price stagnated and even fell to the 60,000 KRW level. Recently, it has recovered to the 80,000 KRW level but remains about 17% below its peak. SK Hynix was no different. It reached 150,000 KRW in March but fell below 100,000 KRW in October. Despite a recent rebound, it is still about 16% below its peak.

Next year, supply and demand are expected to improve, alleviating concerns about the industry. The recent stock price strength is interpreted as reflecting these expectations. Lee Wonsik, a researcher at Korea Investment & Securities, said, "Considering that the DRAM supply growth rate of memory companies next year is 19%, DRAM supply and demand are expected to stabilize faster than anticipated," adding, "As set production improves, inventories of downstream companies are decreasing, and set demand forecasts are gradually being revised upward, which could lead to inventory accumulation demand for memory and positively affect DRAM spot prices."

Samsung Electronics is especially regarded as the most attractive investment. Kim Dongwon, a researcher at KB Securities, said, "Compared to the rise rates from the lows of SK Hynix and Micron stock prices, Samsung Electronics is only about one-third, so its relative attractiveness in the global semiconductor sector will increase."

SK Hynix, which quickly recovered after hitting a low in October, also appears to have entered an upward trend from a long-term perspective. Song Myungseop, a researcher at Hi Investment & Securities, said, "It is highly likely that SK Hynix’s stock price confirmed a bottom at the previous low, and from a long-term perspective, it has already entered an upward trend. Therefore, if a period of correction occurs in the future, it should be used as a good opportunity for low-price buying."

Automobiles, Electric Vehicles to Determine Stock Direction

The automobile sector, which had high expectations this year due to demand recovery and expansion of the electric vehicle market, was hampered by semiconductor supply shortages. Hyundai Motor reached an intraday high of 289,000 KRW in January, marking a 52-week high, but then showed a sluggish trend. Kia also reached a 52-week high of 102,000 KRW in February but fell to the 70,000 KRW range in October and has recently recovered to the mid-80,000 KRW range, though still below its peak.

Next year, the automobile sector’s stock prices are expected to be determined by electric vehicles. Recently, Hyundai Motor raised its electric vehicle sales targets, showing strong stock performance and reclaiming the 6th position in KOSPI market capitalization. Song Seonjae, a researcher at Hana Financial Investment, said, "The reason Korean automakers’ stock prices were sluggish despite good sales, market share, and profit trends was that the speed and plans for electrification, a key variable for valuation upgrades, were relatively slow," adding, "With Hyundai Motor’s recent indication of raising electric vehicle sales targets and the reorganization of its R&D organization focused on electrification, acceleration toward electrification is being sensed, which is expected to have a positive impact on valuation and stock prices."

The sequential launch and sales contribution of the Ioniq 5 and EV6 in Europe and the U.S. have increased monthly electric vehicle market share, and the expected electrification targets and concrete execution plans to be announced in the first half of next year are anticipated to act as additional catalysts.

Steel Stocks, Momentum Recovery Expected in First Half of Next Year

POSCO’s stock price, which surpassed 400,000 KRW in May, has recently been trading in the 280,000 KRW range, about 32% down from its peak. The decline in steel prices originating from China dragged down the stock price. The historically high steel and copper prices in China reached in May turned bearish in the second half of the year due to the Chinese government’s control over raw material prices and concerns about demand slowdown.

Lee Jonghyung, a researcher at Kiwoom Securities, said, "The core Chinese economic momentum, which is key to the industry, will bottom out in the fourth quarter of this year and recover from the first quarter of next year, strengthening upward pressure on steel and non-ferrous metal prices," adding, "With a reduction in Chinese imports, the structural profit capacity of domestic steel companies will improve, and earnings improvement will begin in earnest from the second quarter of next year."

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