[Into the Stocks] When Will Hyundai Motor and Kia Run... Individual Investors Fully Buy Amid Divergent Views

[Asia Economy Reporter Lee Seon-ae] 281.6 billion KRW, 256.6 billion KRW. These are the amounts individual investors have net purchased in Hyundai Motor and Kia stocks over the past two weeks. In terms of trading value, they rank 3rd and 5th respectively. Despite the stock prices continuing to decline and recently hitting 52-week lows, the confidence of retail investors remains firm. If there were no belief that the stock prices would rise after overcoming the 'excessive drop,' betting in a bear market would practically cease. When will the stock prices respond to individual investors' confidence? Securities firms' outlooks on whether a rebound will occur are divided. Moreover, opinions vary regarding Hyundai Motor and Kia recently holding Investor Days to reveal their mid- to long-term growth strategies.

According to the Korea Exchange on the 7th, while Hyundai Motor and Kia stock prices slid 6.75% and 7.35% respectively over the past two weeks, individual investors purchased a total of 538.3 billion KRW worth of shares. The securities industry views this as stemming from the belief that, although stock prices plunged due to vehicle semiconductor supply issues and the Russia-Ukraine war, the fundamentals remain sound. In fact, individuals bought Kia shares every day without rest during the two weeks. Hyundai Motor was also net purchased on all but two trading days. During this period, both stocks hit 52-week lows, but investors saw this as an opportunity rather than fear.

The securities industry also holds the view that this is a buying opportunity. Yoo Ji-woong, a researcher at KTB Investment & Securities, stated, "As of last month, a recovery trend in Hyundai Motor and Kia's sales volume has been confirmed," adding, "They are entering a phase of trend recovery." Im Eun-young, a researcher at Samsung Securities, also noted, "Despite a decrease of three operating days at Korean factories in February, Hyundai Motor and Kia's wholesale sales increased by 7.8% and 3.7% month-on-month, respectively," and explained, "Although a production decrease of up to 20,000 units is expected due to the suspension of operations at the Russian plant, other factories will sufficiently compensate, continuing the sales recovery trend."

However, a conservative outlook suggests that it will take more than three years for vehicle semiconductor supply to normalize, which could act as a stumbling block for stock price increases. This implies that it is not too late to wait for the normalization process to be confirmed. An anonymous researcher said, "The supply shortage is likely to be prolonged," and added, "Rather than using bottom-fishing as an opportunity, seeking other sectors is considered a better way to improve returns."

Opinions also diverged regarding the recent Investor Days where both companies revealed their growth strategies. While Kia received predominantly positive reviews expecting sustained growth, Hyundai Motor faced criticism for lacking concrete execution plans to achieve its targets.

Starting with Mirae Asset Securities, Korea Investment & Securities, Hana Financial Investment, Samsung Securities, Shin Young Securities, Shinhan Financial Investment, Hanwha Investment & Securities, Hyundai Motor Securities, and IBK Investment & Securities all praised Kia's mid- to long-term goals. Song Seon-jae, a researcher at Hana Financial Investment, explained, "Kia raised its electric vehicle sales targets for 2026 and 2030 from the previous 580,000 and 880,000 units to 807,000 and 1.2 million units, respectively, representing increases of 40% and 36%. Given that 2022 performance is expected to be close to guidance, if these plans are smoothly executed, they could serve as additional momentum for the stock price, maintaining Kia as the top pick in the automotive sector." Regarding Hyundai Motor, he said, "The Investor Day content alone is unlikely to have a significant impact on stock momentum. However, it is necessary to focus on the possibility of profit improvement through the combined effects of price and volume as production normalizes in the second half of the year."

Kim Dong-ha, a researcher at Hanwha Investment & Securities, commented, "Hyundai Motor presented active targets and sustainable growth potential for the 'paradigm shift' from internal combustion engines to electric vehicles, which could improve expectations for its mid- to long-term growth," but also noted, "However, the lack of detailed plans makes it disappointing as a catalyst for stock price increases."

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