Expectations for Performance Concentrated in the First Half of the Year... Largest Outlook Since 2017

Liquidity → Earnings Market Shift... Rising Expectations for Export Economy Recovery

[Asia Economy Reporter Minwoo Lee] As the market shifts from a liquidity-driven phase to a performance-driven phase, expectations for corporate earnings in domestic and international stock markets are rising. A sharp increase in earnings is forecasted through the first half of the year, supported by steadily recovering export conditions.

On the 18th, SK Securities analyzed that domestic and international stock markets are entering a full-fledged earnings season. SK Securities researcher Daehun Han explained, "The first-quarter earnings of U.S. S&P 500 companies are expected to increase by 24.5% compared to the same period last year," adding, "This is the highest level since the third quarter of 2018 (26.1%)." Expectations for domestic stock market earnings are also growing. The estimated net income of KOSPI companies this year has surpassed 140 trillion won for the first time since 2017, already exceeding SK Securities' previous forecast of 133 trillion won made last year. Researcher Han analyzed, "The current stock market is transitioning from a liquidity-driven phase to a fundamentals-driven phase centered on earnings," and added, "The heightened expectations for earnings support SK Securities' bullish outlook on the stock market."

In particular, expectations for first-quarter earnings are even higher. SK Securities estimated KOSPI net income for the first quarter at 32.5 trillion won, marking the third-largest scale in history following 2018 and 2017. Earnings estimates are being revised upward across most sectors. The first-quarter earnings estimates have already risen 14.3% compared to the beginning of the year and 4.4% compared to the previous month. Second-quarter earnings estimates are also rising sharply. Researcher Han stated, "This means that earnings momentum is better in the first half of the year than in the second half," and predicted, "The domestic stock market will continue its upward trend through the first half."

In this context, he advised paying close attention to the macroeconomic indicators to be released next week. In particular, he emphasized the importance of closely watching the export-import statistics for April (from the 1st to the 20th), which will be announced on the 21st. Last month’s exports confirmed strong external demand, and it is crucial to see whether this trend continues in this month’s export figures.

Researcher Han projected, "Since exports from the 1st to the 10th increased by 24.8% compared to last year, there is a high possibility that the export recovery trend will be reconfirmed in this export data," adding, "If the export recovery momentum is reaffirmed, expectations for earnings will continue to rise." He also added that, based on this background, SK Securities maintains a positive view on sectors such as semiconductors, eco-friendly industries (with the climate summit scheduled for the 22nd), steel, and construction/building materials, which benefit from favorable external policies and earnings expectations.