"Domestic Stock Market Stabilizes... Focus on Oversold, Reopening, and Supply Chain Stocks"

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Analysts in the securities industry have suggested that the domestic stock market is entering a phase of stabilization. Stocks to watch this week include those that have experienced excessive declines, reopening stocks, and those related to the global supply chain.

On the 20th, Samsung Securities diagnosed that last week, the Korean stock market gradually found stability amid concerns over the U.S. Federal Reserve's asset tightening and geopolitical risks. Shin Seungjin, a researcher at Samsung Securities, said, "Compared to the Chinese stock market, which experienced a large drop last week, our market showed relative resilience," adding, "From a valuation and technical perspective, the firm downside rigidity of the KOSPI at 2600 points was confirmed once again."

However, uncertainties in the external environment remain. Researcher Shin noted, "The external environment that can drive a full-fledged market rise is still unclear," explaining, "This is because investors are likely to remain cautious as they await confirmation of first-quarter earnings amid rapid inflation." If the market shows a box range movement, it is highly likely that sector- and stock-specific rotation will continue.

From this perspective, stocks that have experienced excessive declines and those benefiting from policy changes were recommended as the top investment priorities. Although there are no issues with growth potential, valuation pressure has eased due to the stock price declines. Stocks with excessive declines include NAVER, NCSoft, Duksan Neolux, and Daehan Petrochemical. Reopening and policy change-related stocks include Classys, Shinsegae International, and IS Dongseo.

Stocks related to supply chain restructuring were also recommended. These include SK Innovation, LG Innotek, and Hyundai AutoEver.

Researcher Shin concluded, "While a V-shaped rebound is difficult to expect, major macro indicators are showing signs of stabilization," adding, "Stock prices have fallen more than the earnings cuts anticipated by the market, so performance during the upcoming rebound is expected to be relatively better."