Find the Next 'Tae.Jo.I.Bang.Won'

On the 2nd, the KOSPI opened at 2,427.7, up 12.09 points (0.5%) from the previous trading day, at the Hana Bank dealing room in Jung-gu, Seoul. The won-dollar exchange rate started at 1,356.0, up 1.1 won. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Hwang Junho] "Find the next ‘Tae·Jo·I·Bang·Won (Solar Power·Shipbuilding·Secondary Battery·Defense·Nuclear Power)’."

Despite the U.S.'s strengthened tightening stance causing the stock market to turn pale this summer, there is a busy movement to find the next-generation stocks to follow the ‘Taejoibangwon’ that led the market. Securities firms advise paying close attention to the Chinese government's actions starting this month, as these sectors have continued to perform well amid fluctuating international situations.

On the 2nd, KB Securities researcher Heo Inhwan defined, "From the perspective that companies reduce facility investments during economic slowdowns, ‘Taejoibangwon’ is a theme where general macro logic does not apply," adding, "It is an investment product created by international political logic."

In particular, Hanwha Aerospace’s (up 23.91% in one month) export of the Polish K-9 self-propelled howitzer and Hyundai Rotem’s (12.43%) supply of Polish K2 tanks can be seen as beneficiaries of international conflicts. The consecutive order wins in the solar power sector, such as Hyundai Energy Solutions (35.84%), and shipbuilding stocks like Hyundai Mipo Dockyard (12.90%) were also achieved for the same reason. LG Energy Solution (9.72%) is pushing forward with establishing a joint venture with Japan’s Honda due to supply chain restructuring amid the U.S.-China confrontation.

However, it is difficult to expect these stocks to continuously lead the market. Kim Jang-yeol, a researcher at Sangsangin Securities, dismissed this by saying, "It is already a well-known and agreed-upon theme," and added, "At this point, any stock must strictly follow the principles of phased buying (to secure a safety margin) and stop-loss."

Researcher Heo believes that if a change of hands occurs, it is likely to be triggered by shifts in international political situations. Currently, the U.S. holds the initiative in geopolitical changes, but it is more likely to happen when China moves. Heo explained, "After President Xi’s reappointment becomes concrete, attention should be paid to the possibility of fiscal policy being fully implemented," adding, "The main goals will be economic slowdown mitigation and defense against the U.S., focusing on the 5G industry, solving data exclusion issues, and the Dong-su Seo-san project to balance power demand between east and west."

On the other hand, Shin Dong-gil, a researcher at Shinhan Financial Investment, forecasted, "Despite the Chinese government’s efforts to promote consumption, the economy is unlikely to improve easily due to COVID-19 prevention policies," and added, "Skepticism may continue until the effectiveness of stimulus measures is confirmed."