If It's a 'Binjip' with Rising Performance but Low Institutional Buying Intensity, Target It for "Excellent Returns"

[Asia Economy Reporter Lee Seon-ae] As the concentration of supply and demand is expected to increase in stocks with improved earnings, investment advice has emerged suggesting that in order to achieve additional returns, it is necessary to combine the 'earnings' factor with the 'institutional supply and demand vacancy' factor.

According to Hana Financial Investment on the 5th, the earnings variable alone has recorded very strong performance as a single factor. The performance of earnings upgrade long (40 stocks) and earnings downgrade short (40 stocks) within the KOSPI 200 universe has reached 142.8% from 2016 to the present, the highest compared to other factors. However, when adding the so-called institutional supply and demand vacancy factor, which is the top institutional net selling (3 months) besides the earnings variable, even higher results are obtained than the above performance. The institutional supply and demand vacancy factor is an alpha factor that has recorded a return of 43.8% from 2016 to the present. Due to environments such as active fund redemptions and pension fund stock ratio reductions, buying stocks that institutions have heavily sold and selling stocks that institutions have heavily bought would have generated profits. Ultimately, combining the earnings momentum factor with the institutional supply and demand vacancy factor showed a performance of 182.4% during the same period, about 40 percentage points higher than considering only the 'earnings' variable.

Researcher Lee Kyung-soo of Hana Financial Investment said, "Simply put, if you select stocks whose earnings are upgraded but institutions have not purchased, the strategy considering only the earnings variable will yield higher performance."

Hana Financial Investment's attractiveness ranking by industry is as follows: Energy (refining), non-ferrous metals, telecommunication services, semiconductors, aerospace and defense, holding companies, steel, textiles and apparel, pharmaceuticals, and airlines. By stock, they suggested Huseong, Isu Petasys, DB HiTek, Simtek, Hanse Industrial, VC, Haesung DS, MindsLab, Geosoft, Intops, KeyEast, and JC Chemical.

Meanwhile, the estimated operating profit for KOSPI in the second quarter is either flat or slightly revised upward. This is due to the first quarter earnings coming out about 8% higher than expected, leading to upward revisions for the second quarter and annual earnings. However, through the first quarter review report, the upward revision for the second quarter and annual earnings is limited (adjustments will be made after sufficiently observing changes during the second quarter), so the upward revisions are expected to begin in earnest from the end of June, close to the second quarter earnings season. The researcher noted, "Of course, if variables such as raw material prices and interest rates act unfavorably on earnings in the meantime, the upward guidance from the first quarter earnings season could be offset."

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