[Center Director's Stock Market Analysis] Promising Sectors This Year: "Semiconductors as Expected"

Most Recommended Industry 'Semiconductor'
Samsung Electronics and SK Hynix Recommended
Robots and AI Also Promising to Change the IT Industry Landscape

The heads of research centers at major domestic securities firms unanimously identified the 'semiconductor' sector as the most noteworthy industry this year. This is due to expectations of significant sales growth driven by improvements in the memory semiconductor market and the full-scale supply of high-bandwidth memory (HBM) for generative artificial intelligence (AI) servers. Additionally, AI and robotics, key technologies poised to reshape the future IT industry landscape, were highlighted as promising sectors. As the country approaches a super-aged society, the bio healthcare sector, with new growth momentum expected from telemedicine and new drug pipelines, also deserves attention.

Twelve heads of research centers at domestic securities firms unanimously selected semiconductors as the promising sector to lead the stock market this year. Kim Sang-hoon, head of the KB Securities Research Center, stated, "Ahead of the launch of new device AI-related products, there will be a sharp increase in memory semiconductor inventory accumulation demand, leading to a significant rise in memory chip orders from client companies."

Yoon Chang-yong, head of the Shinhan Securities Research Center, analyzed, "The semiconductor theme's dominance is likely to continue for some time. Production and shipments of semiconductors are improving from their lows, indicating signs of a market turnaround."

Hwang Seung-taek, head of the Hana Securities Research Center, forecasted, "As semiconductor inventory adjustments conclude, high-value-added memory such as HBM for AI is expected to act as a factor improving the semiconductor market next year."

With the anticipated growth in the semiconductor industry, recommended stocks included semiconductor-related companies such as Samsung Electronics and SK Hynix. Samsung Electronics is approaching the 80,000 KRW mark, buoyed by optimism about the semiconductor market. SK Hynix has also drawn an upward trend, reclaiming the second position in KOSPI market capitalization after two years.

Oh Tae-dong, head of the NH Investment & Securities Research Center, explained, "Samsung Electronics' annual operating profit in 2024 is expected to continue increasing, supported by rising memory prices. The HBM segment, which had lagged behind competitors, is also anticipated to record meaningful growth, resulting in significant year-on-year sales increases." He added that SK Hynix is recommended because "strong demand for high-performance memory such as DDR5 and HBM is favorable, and benefits from market improvements are expected."

Robotics, healthcare, bio, and internet IT sectors are also expected to lead the stock market this year. Ko Tae-bong, head of the Hi Investment & Securities Research Center, said, "Internet software is entering a phase of full-scale AI technology adoption and can benefit from interest rate cuts. Bio and healthcare sectors also benefit from interest rate reductions, with expectations of gains from the revaluation of various pipelines."

Kim Young-il, head of the Daishin Securities Research Center, predicted, "The robotics industry is expected to enter a new growth cycle. Demand will arise not only from factory automation but also from various sectors such as enterprises and households. Factory automation will accelerate, expanding new demand sources."

Recommended stocks included NAVER, Kakao, Hanmi Pharm, Yuhan Corporation, LIG Nex1, and Samsung Biologics. Many research center heads recommended NAVER as a beneficiary in the internet IT sector, due to the visibility of AI business models and expected improvements in advertising and commerce performance.

The aerospace sector was mentioned as an industry expected to benefit from policy support. Kim Sang-hoon of KB Securities said, "It should be noted from the perspectives of technological hegemony competition and domestic policy benefits. Budget increases in this field due to global technology competition, along with policy momentum from the passage of the domestic Aerospace Agency Special Act, are anticipated."

Regarding secondary batteries, which heated up the stock market last year, opinions were expressed that the upward trend remains valid. Kim Young-il of Daishin Securities stated, "Due to the surge in 2023, the upward momentum this year may be limited, but the upward trend remains intact. A moderate rise with volatility is expected, supported by sufficient price corrections, easing valuation burdens, and inflows of short-covering purchases." However, he noted that the rebound in raw material prices related to secondary batteries and the timing and reliability of earnings recovery will determine the continuation of the secondary battery upward trend.