March Stock Market Shaken by COVID-19... Which Theme Suffered the Most?

Eco-friendly Cars and Autonomous Vehicles Show Larger Decline Rates... Aging Population and Robotics Outperform KOSPI Returns

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[Asia Economy Reporter Minwoo Lee] As the spread of the novel coronavirus infection (COVID-19) raised concerns about a global economic slowdown, global stock markets fluctuated wildly. Around the 20th of last month, the US and South Korean stock markets plunged nearly 30% compared to the beginning of the month. Although a sharp rebound followed, the S&P 500 and KOSPI indices closed March down 12.5% and 11.7% respectively from the start of the month. Among them, the sectors that fell more than the stock indices were the eco-friendly car and autonomous vehicle sectors.

According to the theme indices of seven sectors announced by Samsung Securities on the 5th, the eco-friendly car theme index showed the largest decline of 17.7% over the past month. Among domestic individual stocks, companies related to automobiles and batteries such as Iljin Materials (32.3%), Mando (30.5%), Kia Motors (28.3%), and SKC (27.6%) experienced the largest drops. Among overseas stocks, the US electric vehicle company Tesla recorded a monthly return of 21.6%.

The second largest decline was in the autonomous vehicle theme, which fell 13.6% over the month. Among domestic stocks, similar to the eco-friendly car theme, automobile sector stocks and IT stocks such as Samsung Electro-Mechanics (22.5%) and Daeduck Electronics (22.2%) showed notable declines. Among overseas stocks, US ride-sharing company Lyft (29.6%) and Japan’s SoftBank Group (24.4%) fell significantly.

As of the end of February, the autonomous vehicle theme index had the best price-to-earnings ratio (PER) valuation and earnings momentum, but due to rapid market changes, its relative return compared to the KOSPI was only 1.9%. In contrast, the aging theme index and robotics theme index posted returns of 2.9% and 5.8%, respectively, significantly outperforming the KOSPI index. Samsung Securities researcher Won Dong explained, "Expectations for COVID-19 treatments and vaccine development, as well as expectations for production and logistics automation, seem to have been effective." He added, "Meanwhile, since the autonomous vehicle theme has the best PER valuation this month and 5G has the best earnings momentum, these themes deserve attention."

Meanwhile, Samsung Securities calculates seven theme indices?aging, robotics, fintech, eco-friendly cars, autonomous vehicles, millennial generation, and 5G?to assess the direction of the domestic stock market based on themes.