"Responding with Value-Up in Banking, Telecommunications, and Holding Sectors at Year-End"

Korea Investment & Securities Report
KOSPI Band for December Proposed at 2600~2600 Range

Korea Investment & Securities proposed a KOSPI band of 2400 to 2600 points for December on the 2nd. They also advised focusing on value-up stocks due to the unstable economic environment and bleak earnings outlook for the fourth quarter.

Yonhap News

Kim Dae-jun, a researcher at Korea Investment & Securities, stated in a report released that day, "The global economy has been rapidly changing since the U.S. presidential election in November," and analyzed, "Korea is highly exposed to Trump risk due to its export-oriented economy."

The Bank of Korea's decision to cut the base interest rate is also interpreted as reflecting these concerns. He explained, "Since the reason for the rate cut lies in economic slowdown, the attractiveness of cyclical sectors is expected to weaken," adding, "There are no factors leading to a strong Korean stock market, so it is necessary to maintain a cautious view and adapt to the changing environment."

He saw the cause of the Korean stock market's sluggishness in supply and demand. He said, "The problem is that foreign investors are rapidly withdrawing from the Korean stock market," noting, "Until November 29, foreign funds sold domestic stocks for 14 consecutive weeks, totaling 18.9 trillion won."

Such foreign capital outflow is mainly due to the weakening earnings outlook, but exchange rate changes are also cited as a factor. He said, "Price and exchange rate changes are key variables affecting foreign investors' returns. Due to deteriorating earnings, stock prices fell, and the exchange rate shifted to a weaker won, creating an unfavorable environment," adding, "Even if the exchange rate may decline in the future, a high level could be maintained in the fourth quarter of this year, so foreign net selling may continue."

This is why selection and concentration are necessary from a response perspective. Researcher Kim emphasized, "The macro environment is unstable, and the earnings outlook is not promising," adding, "Ultimately, it is necessary to focus on sectors where earnings can be stably maintained and volatility is not large." In particular, he said attention should be paid to media, utilities, and shipbuilding in terms of earnings outlook.

For sectors to watch at year-end, he pointed to banks, telecommunications, and holding companies. Researcher Kim said, "Sectors that can be newly included in the value-up index will differentiate themselves from other industries in terms of profitability and shareholder returns," adding, "The market has already argued that banks, telecommunications, and holding companies will be included in value-up sectors."

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