Market Without Focus Amid Rising Theme Proliferation
"Investment Difficulty High, Return Expectations Should Be Lowered"
Investors' buying momentum is wandering here and there, leading to a rotating market. Experts advise that while short-term trading can be used to respond to overlooked stocks, instead of overreacting to every theme, investors should wait for the next opportunity and focus on risk management.
According to the financial investment industry on the 7th, the number of sectors that recorded a higher rate of increase than the KOSPI index in April and May was similar, with 16 and 13 sectors respectively. However, there were differences in sector-by-sector fluctuations within that. From April to May, sectors such as hotels, leisure, and cosmetics took a brief pause, while retail, distribution, and semiconductors rose. With a limited number of rising sectors, investors' attention shifted between sectors, continuing the rotating market.
In the securities industry, it is expected that buying momentum will continue to move between themes for the time being, following last month. Even in a market with such rapid turnover, analysts suggest that investors aiming for excess returns compared to the index can effectively respond with short-term trading. Lee Kyung-min, a researcher at Daishin Securities, said, "There is a possibility that the KOSPI can rebound within a limited range, allowing for trading responses," adding, "Investors should establish response strategies based on upcoming market trends such as the U.S. Federal Open Market Committee (FOMC) and Consumer Price Index (CPI) results." He further analyzed, "Some funds flowing in at the peak of the won-dollar exchange rate can act as a driving force for the rotating market," and "For now, attention should be paid to overlooked stocks, but if bond yields stabilize downward, the next leading sector in the rotation could be secondary batteries."
Following Every Theme Is Risky... "Good Opportunities Will Come Again"
Due to the increased market difficulty caused by the rotating market, many experts advise investors to engage in more proactive risk management. Kang Hyun-ki, a researcher at DB Financial Investment, explained, "Recently, the domestic stock market has drawn investors' attention as memory production companies included in artificial intelligence (AI) chips have emerged as key stocks," adding, "Considering that short-term trading without a central point usually appears at the end of a market rise, this is currently a stage before that, where various theme stocks related to core industries are gaining attention." He continued, "During such times, investors should lower their expectations for returns and manage risks," and recommended, "Since good opportunities can arise anytime later, in an environment where investment difficulty is increasing like now, it is necessary not to overextend and to observe the trend."
Park Seung-young, a researcher at Hanwha Investment & Securities, also said, "In a rotating market, it is important to look at the market broadly," emphasizing, "If it were not a rotating market but a market led by a single sector, that sector's situation would have to be outstanding or other sectors would have to be particularly weak, but the current stock market is not like that." He added, "Last year, most sectors were sluggish, so demand concentrated on secondary batteries. But the situation is different now," and cautioned, "Investors should refrain from overreacting to specific sectors while responding to the rotating market."
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