Hana Financial Investment, Analysis of Correlation Between Oil Price Increase and Stock Prices and Earnings
Recommendations: Hojeon Industrial, LX International, Dongkuk Steel, PSK, POSCO
[Asia Economy Reporter Ji Yeon-jin] As international oil prices surpass $80 per barrel, concerns over rising costs for domestic companies are growing, emerging as a downward pressure factor on the stock market. However, industries that can pass on cost increases to selling prices have greater potential for profit improvement, making it necessary to focus on these sectors.
On the 13th, Hana Financial Investment analyzed the monthly delta values of West Texas Intermediate (WTI) crude oil from 2010 to the present and the correlation between profits and stock prices of domestic industries. The sectors that showed improved stock prices and net profits with rising international oil prices included trading companies, machinery, home appliances, automobiles, steel, construction, banking, chemicals, food and beverages, display, electrical equipment, pharmaceuticals, shipping, and semiconductors.
Meanwhile, industries with low cost of goods sold ratios such as cosmetics, media entertainment, and telecommunications services, as well as semiconductors and pharmaceutical bio sectors, were not affected by the rise in oil prices. Industries with high cost of goods sold ratios but recent improvements in operating profit margins due to price increases include shipping, healthcare equipment, display, chemicals, steel, pharmaceutical bio, semiconductors, energy, textiles and apparel, aviation, and non-ferrous metals.
It is expected that these sectors will benefit the most if there are no further sharp fluctuations in international oil prices. Lee Kyung-soo, a researcher at Hana Financial Investment, said, "Until the first half of next year, it is difficult to expect strong momentum due to exposure to a negative base effect in terms of performance, but the market is expected to have high interest in which sectors have relatively good performance. The steadily increasing profit momentum factor, which involves buying and selling based on recent performance fluctuations, proves this."
However, it seems necessary to pay attention to related stocks that have been less influenced by institutional investors rather than those that have seen significant inflows from institutions so far. Hana Financial Investment recommended stocks such as Hojun Industrial, LX International, Dongkuk Steel, PSK, and POSCO, which showed improved third-quarter performance and have had relatively less institutional inflow over the past three months.
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