"Market Trends by Sector... Focus on Large-Cap Stocks with Improved Profit Margins"

In terms of stock market trends, advice was given to pay attention to large-cap stocks with confirmed improvements in profit margins.

The KOSPI index approached the 2800 level during the trading session on the 20th, with employees moving busily in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. The KOSPI fluctuated, closing at 2,797.12, down 0.21 points (0.01%) from the previous day. Photo by Jo Yongjun jun21@

Yeom Dong-chan, a researcher at Korea Investment & Securities, stated in a report on the 21st, "If the stock market showed an overall bullish trend in the first quarter, the second quarter is characterized by a stock market led by some large-cap stocks," adding, "This is a trend that can be observed both in the US and Korea."

A representative example is that within the same semiconductor sector, SK Hynix is showing better performance this year compared to Samsung Electronics.

Researcher Yeom also attributed Nvidia's achievement of reaching the number one market capitalization position to improvements in profit margins. He explained, "It is remarkable that Nvidia, which was only ranked 40th in market capitalization five years ago, has risen to number one. In particular, its profit margin stands out. Currently, Nvidia's profit margin exceeds 60%."

He pointed out that a common characteristic of stocks outperforming the market recently is that they showed improvements in profit margins in the first quarter and maintained high absolute profit margins. Yeom said, "Considering the profit margin difference between Samsung Electronics and SK Hynix, this is easy to understand. Among large-cap stocks, those with a first-quarter profit margin above 20% and a profit margin at least 5 percentage points higher than the average of the past five years rose by 17.5% in June." The average return for large-cap stocks was 2.7%.

Researcher Yeom emphasized that a high profit margin ultimately means competitiveness. Taking this into account, he said, "When selecting stocks in a stock market trend, choosing from stocks with high profit margins will be an alternative to improve the winning rate," and added, "Among large-cap stocks, I suggest focusing on those with high absolute profit margins and confirmed improvements in profit margins as stocks of interest."

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