KOSPI Enters Earnings Recession Phase, Focus on Defensive and Low PBR Stocks

Food & Beverage, Telecom, Dividend Stocks Representative
Foreigners Focused on Buying Convenience Store Owners
Semiconductor Stocks May Reverse to Decline

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] An analysis has emerged that our stock market has moved out of an inverse financial market driven by monetary policy and entered an inverse earnings market. Accordingly, there are voices emphasizing the need to focus on 'defensive stocks' and low PBR (price-to-book ratio) stocks as sectors that will lead our stock market in the inverse earnings market.

According to the financial investment industry on the 14th, it is analyzed that our stock market entered an inverse earnings market as the burden of inflation eased following the October U.S. Consumer Price Index (CPI) surprise.

In fact, the U.S. October CPI was announced to have risen 7.7% year-on-year. This was below market expectations and marked the smallest increase since January this year. As a result, overall upward inflationary pressure eased, raising the possibility that the inverse financial market, where stock prices move according to monetary policy due to relief in monetary policy concerns, has ended in the future global financial market.

Lee Kyung-min, a researcher at Daishin Securities, said, "So far, the stock market has been swayed by inflation and monetary policy issues," adding, "Now is the time to leave the inverse financial market behind and prepare for the inverse earnings market."

The inverse earnings market is characterized by stock prices falling faster than earnings decline, showing a pattern where stock prices and interest rates fall simultaneously as the economy enters a recession. Therefore, in the inverse earnings market, individual corporate earnings have a greater impact on stock prices than interest rates. It is advised to build a portfolio focusing on stocks expected to have higher operating profit growth rates next year than this year, and defensive stocks that consistently perform regardless of the recession.

Representative defensive stocks include food and beverage, telecommunications, and dividend stocks. In fact, foreigners have been buying representative dividend stocks and food and beverage sector stocks such as KT&G, as well as convenience store-related stocks, during the 'Buy Korea' period that started at the end of September.

On the other hand, there is an analysis that the power of semiconductor and secondary battery stocks, which recently led the rise of our stock market, is weakening as leading stocks.

Researcher Lee said, "Although semiconductor and secondary battery stocks continue their rebound, the strength of the rebound is gradually weakening, so a downward reversal is possible in the near future," advising, "It is recommended to refrain from chasing purchases as much as possible and to maintain the opinion of reducing stock holdings and increasing cash holdings."

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