As Leading Stocks Recover, the Index Also Rises

Semiconductor and Secondary Battery Stocks Rebound, Lifting the Index
Expect Continued Trend of Leading and Neglected Stocks Aligning for a While

As leading stocks revived, the KOSPI and KOSDAQ, which had been in a recent downtrend, rebounded. Although the concentration on secondary battery stocks has somewhat eased, leading to a 'catching up of overlooked stocks,' opinions suggest that a response centered on leading stocks is ultimately necessary.

On the 9th, the KOSPI successfully rebounded after six days, reclaiming the 2600 level. The KOSDAQ also showed an upward trend after four days, recovering the 900 level. Leading stocks drove the index rebound. Samsung Electronics rose 1.92% that day, and LG Energy Solution increased by 5.33%. EcoPro BM and EcoPro rose by 1.33% and 4.64%, respectively.

The index had declined due to issues such as the U.S. credit rating downgrade and weak Chinese exports. In particular, the adjustment in secondary battery stocks overlapped, continuing the index's weakness. As leading stocks wavered, it was difficult to open the way for a rebound. According to Daishin Securities, the stocks contributing most to the KOSPI's decline over the past week were Samsung Electronics (25.6%), LG Energy Solution (9.2%), POSCO Future M (5.9%), SK Hynix (5.8%), and Samsung SDI (4.7%). Leading semiconductor and secondary battery stocks dominated. On the KOSDAQ, EcoPro BM (23.5%), EcoPro (12.0%), and L&F (4.0%) had the largest contributions to the decline.

Amid the sluggishness of leading stocks, overlooked stocks showed strength. Researcher Nodonggil from Shinhan Investment Corp. said, "The sectors that recently ranked high in returns were software, cosmetics & apparel, distribution, healthcare, hotel & leisure, and media, which were generally sectors with relatively lower relative returns compared to the index since the beginning of the year," adding, "This is interpreted as a return gap-filling phenomenon where the weight shifts to sectors with relatively less price burden during the easing of concentration."

It is analyzed that the Q2 earnings triggered the gap-filling among overlooked stocks. Researcher No said, "During the process of lowering Q2 earnings expectations, stocks that met or exceeded expectations rebounded," adding, "This was a common pattern experienced by representative stocks in software, cosmetics, distribution, and healthcare."

Since volatility centered on secondary battery stocks remains, it is expected that the tug-of-war phase between leading and overlooked stocks will continue for the time being. Researcher Jo Jaewoon from Daishin Securities said, "While the leading stocks that recently lifted the index paused, sectors with good earnings but overshadowed by leading stocks showed an upward trend," forecasting, "The trend of leading stocks driving the index and overlooked stocks catching up will continue for the time being."

However, once the Q2 earnings season concludes, attention is expected to shift back to existing leading stocks. Researcher No said, "From the perspective of 12-month forward operating profit, sectors with the highest profit momentum are utilities, semiconductors, shipbuilding, machinery, and automobiles, which are existing leading stocks," adding, "If the weight shifts to future prospects after the Q2 earnings season ends, responses should be centered on existing leading stocks."