Which Stocks Should I Consider Buying After the Chuseok Holiday?

[Asia Economy Reporter Koh Hyung-kwang] Amid increasing volatility in domestic and international stock markets, domestic securities firms have recommended stocks with expected earnings growth as well as oversold stocks as sectors to increase their weight in after the Chuseok holiday.

According to the financial investment industry on the 1st, securities firms commonly recommended IT-related stocks, oversold stocks, Chinese consumer stocks, and media stocks as stocks to watch after Chuseok. After Chuseok, risks such as the resurgence of the novel coronavirus infection (COVID-19), the U.S. presidential election, and economic indicator slowdown are piling up. Early this month, consumer stocks are expected to see earnings growth due to China's National Day, and vaccine announcements are scheduled for the end of this month. In addition, the third-quarter earnings of domestic listed companies are also expected to be positive, leading the securities industry to see momentum for a stock market rebound.

At KB Securities, sectors to increase weight after Chuseok include semiconductors, media (advertising), IT hardware & home appliances, and contact-related stocks. Selected stocks for the October portfolio include Samsung Electronics and SK Hynix in semiconductors, LG Electronics in IT hardware & home appliances, and Cheil Worldwide in media.

Researcher Lee Eun-taek of KB Securities said, "The U.S. presidential election results will likely be known by mid-November, and COVID-19 is expected to resurge in the U.S., but vaccine announcements are scheduled for the end of this month," adding, "The risk of economic indicator slowdown will be alleviated by uncertainties such as 'additional stimulus agreement' by the end of the year." He also added, "Although further price adjustments are expected for technology growth stocks, except for some small and mid-sized biotech stocks, overheating corrections have proceeded to some extent."

Samsung Securities expects positive third-quarter earnings from listed companies and recommends compressing portfolios into sectors with differentiated earnings growth such as IT, automobiles, batteries, and internet. Researcher Shin Seung-jin of Samsung Securities said, "Starting with China's National Day in the first week of this month, the full-scale consumption season begins, and the e-commerce market will continue its rapid growth," adding, "It is good to pay attention to Naver and CJ ENM, which specialize in online shopping, and Cosmax, the world's No.1 cosmetics ODM."

At Korea Investment & Securities, oversold stocks were prioritized for recommendation. Researcher Kim Dae-jun of Korea Investment & Securities emphasized, "Before holidays like Chuseok or Seollal, investors go through a process of neutralizing positions," adding, "If the market makes a technical rebound, the first priority is oversold stocks."

Researcher Kim said, "Although the stock market is showing signs of adjustment recently, it is an effective tactic to select sectors where optimism about future earnings is still maintained," citing pharmaceuticals, chemicals, and transportation equipment (automobiles) as representative sectors. He advised a tactical buying approach for these sectors and stocks after Chuseok.

In addition, Korea Investment & Securities recommended Samsung Electro-Mechanics due to increased mobile demand and LG Household & Health Care due to expectations of Chinese consumption recovery and National Day.