What is the stock investment strategy amid US tightening concerns?..."Invest in sectors with high expectations for earnings improvement"

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[Asia Economy Reporter Hwang Yoon-joo] As tightening policies accelerate among central banks in advanced countries, advice has emerged to invest mainly in sectors with high expectations for earnings estimate improvements.

According to the securities industry on the 13th, Lee Jae-man of Hana Financial Investment stated in the report "February Asset Allocation Strategy: Triple A," "The stock market needs to consider the possibility of entering the real interest rate plus (+) zone," and "In the phase of base interest rate hikes, changes in corporate earnings determine stock prices."

In fact, the domestic stock market has shown weakness centered on large-cap stocks due to geopolitical risks such as Russia-Ukraine amid the accelerating tightening by the U.S. Federal Reserve (Fed), the surge in international oil prices, and the supply-demand gap caused by the largest initial public offering (IPO) in the country.

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Researcher Lee evaluated, "In the domestic case, the improvement in China's economic momentum is expected to play a positive role in changes to corporate earnings estimates," and "Attention is needed on undervalued sectors based on earnings estimate improvements rather than on stocks with excessive short-term declines."

Advanced country stock markets such as the U.S. also showed a sharp decline centered on growth stocks. Since the beginning of the year until the January low, the S&P 500 Growth Index fell by -14%. Researcher Lee forecasted, "Recently, considering the decline in COVID-19 confirmed cases in the U.S., easing concerns over global supply chain disruptions and logistics crises, and the increase in employment, expectations for reopening are high," and "It is highly likely that earnings estimate improvements will proceed mainly in related sectors."

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