[Click eStock] "Responding to High-Interest Rate Environment with Bang, Eum, and Charo"

Investment advice has been issued to focus on the defense, food and beverage, and automobile sectors to cope with the high interest rate environment.

Kim Dae-jun, Senior Researcher at Korea Investment & Securities, stated in a report on the 27th, "This week may continue the high interest rate environment similar to last week," and analyzed, "If the inflation calming trend does not clearly appear, the timing of the base interest rate cut will continue to be delayed."

Expectations for interest rate cuts have already weakened in the bond market. The yield on the 2-year U.S. Treasury bond has approached the 5% level again. Researcher Kim explained, "As of last Friday, the U.S. Treasury yield curve was bear flattening (rising interest rates by maturity and narrowing long-short term rate spreads)," and added, "If the Fed was expected to cut rates quickly, at least the short-term interest rate would not have risen much more than the long-term rate."

He also viewed that the recovering U.S. economy could lead to upward pressure on interest rates. He said, "So far, long-term interest rates and the economy were separate," and "Market interest rates have only been influenced by inflation and monetary policy. However, going forward, the economy’s power to push up interest rates could also strengthen."

Considering these points, he believed it is not a situation to be complacent about from an investment perspective. Researcher Kim said, "Due to global interest rate synchronization, the required rate of return for the Korean stock market may also rise," and "Investors need to secure a profit rate exceeding this figure to make investment returns viable."

So, which sectors and stocks meet these conditions? Researcher Kim said, "In this regard, I looked at KOSPI sectors where the 12-month forward Return on Equity (ROE) is higher than the Cost of Equity (COE) and where ROE has been revised upward compared to the previous month," and identified "defense, food and beverage, and automobile sectors as meeting these conditions."

He added, "These sectors secure profits through exports and have profitability exceeding the required rate of return," and "They can withstand a prolonged high interest rate environment, so I maintain a positive view on these sectors."

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