"Once Again, the Era of Growthism? ... Focus on Consumer Goods, Media, and SW"

On the 28th, the KOSPI index opened at 2437.57, up 0.91% (22.04 points) from the previous trading day, as dealers were working in the Hana Bank dealing room in Euljiro, Seoul. The won-dollar exchange rate started at 1306 won, down 7.3 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Myunghwan Lee] Will the "time of growth stocks" return? As expectations arise that inflation will somewhat ease in the second half of this year, the appeal of growth stocks is being highlighted. However, advice has also been given to moderate the pace of increasing the proportion of growth stocks until concrete economic indicators are confirmed.

According to the financial investment industry on the 3rd, the Nasdaq index, which includes many technology stocks, showed the largest increase over the past month. The index closed at 155.59 on the 1st of last month and pointed to 180.90 on the 29th of the same month, rising 16.27% over the month. Compared to the Dow Jones Industrial Average, another U.S. stock index, which rose 5.62%, and the Standard & Poor's (S&P) 500 index, which rose 7.97%, this is a remarkable upward trend. The index composed solely of growth stocks also showed a noticeable rise. According to Leading Investment & Securities, over the past month, the Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) and MSCI value stock index grew by 6.9% and 3.8%, respectively, while the growth stock index recorded a relatively large rebound of 10.1%.

Investors' funds are also flowing into exchange-traded funds (ETFs) that invest in growth stocks. According to Hanwha Investment & Securities, from the 25th to the 29th of last month, $2.371 billion (approximately 3.1133 trillion KRW) flowed into dividend growth stock-focused ETFs listed on the U.S. stock market. This marks five consecutive weeks of fund inflows, and Hanwha Investment & Securities noted that the scale of fund inflows is also expanding.

The securities industry analyzed that the investment appeal of growth stocks could increase. Byung-Yeol Kwak, a researcher at Leading Investment & Securities, said, "With interest rate stabilization and a global low-growth phase, the premium for growth stocks will be highlighted again," adding, "If a global growth stock premium occurs, related domestic sectors will also show synchronization." Eun-Seok Park, a researcher at Hanwha Investment & Securities, also said, "Due to ongoing recession concerns, funds may flow into value ETFs with lower short-term volatility," but analyzed, "In the mid-to-long term, recession concerns will lead to interest rate declines, resulting in greater fund inflows into growth ETFs."

However, there are also opinions that the pace of increasing the proportion of growth stocks should be moderated. Jaeseon Lee, a researcher at Hyundai Motor Securities, advised, "Although the low pressure for further interest rate hikes is positive for growth stocks, it is still early to expect a full bet on growth stocks during a period of liquidity contraction," adding, "It is necessary to check the July inflation indicators to be announced in August."

Consumer goods, media, and software were suggested as growth stock sectors. Researcher Lee advised, "Considering that sensitivity to interest rates is decreasing, it is better to respond with defensive growth stock sectors such as healthcare, media, and education." Min-gyu Kim, a researcher at KB Securities, also pointed out, "If we select sectors with both high growth and profitability in 2023, they include growth stocks such as cosmetics and other consumer goods, media, software, and healthcare."

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