[Click eStock] "KOSPI 2500~3000 in Second Half... Respond with Quality Growth Stocks"

There is a forecast that the KOSPI will fluctuate around the 2700-point mark in the second half of the year. While the recovery of corporate earnings is positive, it is believed that persistent high inflation and high interest rate environments could limit the index's rise. The sectors to watch for investment include banking, insurance, machinery, cosmetics, non-ferrous metals, and transportation.

On the 22nd, Kim Dae-jun, Senior Researcher at Korea Investment & Securities, explained in a report, "The expected band for the KOSPI remains between 2500 and 3000 points," adding, "The upper limit reflects an upward revision of return on equity (ROE) and a preemptive consideration of one interest rate cut, while the lower limit assumes a scenario where the profit recovery significantly slows amid the possibility of interest rate hikes in the second half." He further forecasted, "Statistically, the KOSPI is more likely to move sideways at a higher level rather than experience a sharp rise in the second half."

He advised focusing on quality growth stocks in the second half. Kim said, "The high interest rate and high inflation environment is unlikely to ease in the second half. In such a situation, attention should be paid to quality growth stocks with high profitability and strong growth potential."

Regarding sector-specific investment strategies, he recommended maintaining a neutral or higher weighting in semiconductors, automobiles, food and beverages, and utilities, while actively responding to the market with a trading buy perspective on banking, insurance, machinery, cosmetics, non-ferrous metals, and transportation sectors.

He also emphasized the importance of maintaining an IT-centered portfolio that is advantageous in terms of earnings and supply-demand in the second half. He noted, "Earnings in 2024 are expected to reach an all-time high, with IT leading most of the growth. In the first quarter of 2024, foreign investors made the largest net purchases in the history of the Korean stock market, and this trend is likely to continue."

He pointed out that if the timing of inflation reaching the 2% range is delayed, a sideways scenario due to increased interest rate volatility could unfold, and in such cases, it is advisable to prepare for the sideways movement of the index with ETFs. Kim highlighted the 2013?2016 period as a reference, stating, "At that time, interest rate cuts were also anticipated. As a result, a 60/40 stock/bond strategy was effective during that period."

He also mentioned that unlike in the past, earnings forecasts are trending upward, and considering this, selecting sectors with earnings growth can improve expected returns. Kim suggested, "It is necessary to include a 60/40 stock/bond core asset allocation and incorporate earnings improvement ETFs as satellite assets to simultaneously reduce volatility and enhance returns."