'Performance Peak Out' Semiconductor... August Bottom Theory 'Whispers'

[Asia Economy Reporter Ji Yeon-jin] As concerns over a global economic recession spread, expectations for corporate earnings are also declining. Earnings estimates for listed companies are a lagging indicator of stock prices, and typically, stock prices bottom out during the period when earnings estimates are adjusted downward after reaching a peak. An analysis of earnings estimates in the semiconductor sector, which is sensitive to earnings, suggests that stock prices are expected to hit their lowest point next month.

According to a report published by Hana Securities on the 11th, this year's KOSPI net profit estimate peaked at 184.4 trillion won and has currently been revised down by 4% to 176.8 trillion won. In particular, the semiconductor sector's earnings estimates peaked in May this year and have declined for two consecutive months, marking the earliest start of downward revisions. Earnings estimates for the semiconductor sector have been revised down by 11% from the peak. Lee Jae-man, head of the investment strategy team at Hana Securities, stated, "In the case of the semiconductor sector, stock prices tend to form a bottom within 3 months if short, or up to 6 months if long, after the start of downward revisions in earnings estimates," adding, "Considering the timing of past earnings peaks and stock price bottoms, it is judged that the semiconductor sector's stock price bottom formation could occur as early as August."

Looking at past earnings estimates and stock prices of the semiconductor sector, during the 2008 global financial crisis, the semiconductor sector's stock price plunged 55% during the downward revision period after earnings peaked. However, during the 2011 advanced countries' fiscal crisis, the 2013 US monetary tightening, and the 2018 US-China trade dispute, stock prices fell by an average of 17% before reversing. This year, since the semiconductor sector's earnings peak formation, the recent stock price decline rate is -16%, so the risk of further price adjustments due to downward revisions in earnings estimates is considered limited.

Additionally, if the US Federal Open Market Committee (FOMC) raises the benchmark interest rate by 75 basis points on the 27th of this month, and future rate hikes slow to 25-50 basis points, further dollar strength will be difficult, which is favorable for the semiconductor sector. Researcher Lee emphasized, "It is also a time to consider that foreign investors have been net buyers of domestic semiconductor stocks amid a weakening expectation of dollar strength."

.

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