Global Stock Markets Stabilizing... "Focus on Oversold Growth Stocks"

Samsung Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] As global stock markets begin to recover, securities firms have advised paying attention to stocks that experienced excessive declines this week.

On the 31st, Samsung Securities analyzed, "Although concerns about inflation and geopolitical issues persist, investors have started to reconsider the absolute prices in the stock market." They noted that while the real economy remains challenging, the second-quarter earnings of major companies are better than expected.

They also analyzed that the market's interest rate rise and the strength of the dollar index, triggered by concerns over U.S. interest rate hikes, are stabilizing. The yield on the 10-year U.S. Treasury bond has been declining from its June peak of 3.5%. The won-dollar exchange rate has also fallen below the 1300 won level. They concluded that key economic macro indicators, which had burdened growth stock prices, are changing favorably.

Samsung Securities pointed out that downward revisions of earnings estimates for the second half of the year are accelerating, starting from the second-quarter earnings season. The global stock market experienced an unprecedented correction in the first half of this year due to recession concerns, resulting in steep price declines.

Shin Seungjin, a researcher at Samsung Securities, advised, "When the market experiences a short-term rebound, the sectors and stocks with the largest declines tend to rise first. While selections must be strictly based on earnings, if there are no further downward revisions or sufficient adjustments have been made, it may be good to choose growth stocks that have been excessively sold off in the short term."

Samsung Securities recommended Naver, Celltrion Healthcare, and Hanmi Pharmaceutical as growth stocks that have been excessively sold off. Naver was cited due to sufficient downward revisions of earnings estimates and the formation of a short-term bottom in its stock price. Celltrion Healthcare was recommended for its improved profitability from expanded U.S. biosimilar prescriptions and a transition to a direct sales system. Hanmi Pharmaceutical was recommended based on strong earnings and clinical and approval momentum for key pipelines in the second half of the year.