"Changes in Corporate Earnings as a Variable... Focus on Food & Beverage, Semiconductor, and Automobile Sectors"

Advice has emerged that attention should be focused more on changes in corporate earnings rather than macro factors such as the direction of interest rate cuts. In particular, considering that earnings are influenced by domestic exports and trade balance surpluses, it is analyzed that attention should also be paid to stocks in industries where positive signals arise from a trade perspective. The sectors to watch include food and beverages, semiconductors, and automobiles.

Kim Dae-jun, a researcher at Korea Investment & Securities, stated in a report on the 17th, "Exchange rate volatility is showing higher levels than before," and analyzed, "From a top-down perspective, the exchange rate is not favorable to the stock market. This suggests that caution is required when approaching the market solely based on macro trends."

Considering this, he advised that now is the time to focus more on changes in corporate earnings rather than macro factors. Researcher Kim explained, "The somewhat positive aspect is that the KOSPI net profit forecasts are being revised upward consecutively," adding, "IT, which has established itself as the market leader, especially semiconductors dealing with HBM, is leading the improvement in profit forecasts. Following that, sectors such as finance and materials are also contributing to upward revisions in earnings."

However, unlike in the past, among the IT sectors driving profit improvements, not only large-cap stocks are leading the stock market. Kim said, "It is true that the same sector is positively impacting the improvement of KOSPI net profits," but added, "What is unusual is that stocks with relatively smaller market capitalization, such as materials, parts, and equipment, are gaining attention in the market."

Looking at the actual stock market trends, the equal-weighted average method, which increases the proportion of small and mid-cap stocks compared to the market capitalization-weighted average method used for the KOSPI 200 index, is performing well. He said, "Usually, when the equal-weighted average method is strong, a stock-specific market rapidly develops," and added, "The recent trend generally aligns with this interpretation."

Regarding sector performance, the food and beverage stocks stood out. Samyang Foods, Nongshim, and Daesang all recorded returns of over 30% in the past four weeks. Researcher Kim pointed out, "Since the April trade balance results, which can be calculated as part of the second-quarter earnings, were also favorable, if exports continue to improve in May, further stock price increases are quite possible."

He suggested that besides food and beverages, attention should be paid to semiconductors and passenger cars, which recorded the highest trade surplus in April. This is because there is a high possibility that second-quarter earnings will improve.

Researcher Kim said, "In the current stock-specific market, if positive signals are confirmed in variables that can affect earnings, buying should be considered," and added, "In addition to the food and beverage sector mentioned earlier, semiconductors and automobiles should also continue to be watched."

He further explained that since a stock-specific market is underway, companies connected to the relevant value chain can attract market attention at any time.