"Buy Stocks When They Can't Get Worse... Focus on Chemicals, Steel, and Retail"

Hanwha Investment & Securities pointed out on the 2nd that attention should be paid to sectors with low expectations such as chemicals, steel, and retail in the domestic stock market.

Hanwha Investment & Securities expects the domestic and international economic bottom to occur around the second quarter of this year, and forecasts that the period when the stock market passes the bottom will coincide with or slightly precede this timing. Seungyoung Park, a researcher at Hanwha Investment & Securities, diagnosed, "The correction in the stock market typically follows the sequence of stock price decline, economic downturn, and earnings downgrade, and now is the time to wait for earnings downgrades."

He continued, "It is recommended to increase weights in sectors where earnings forecasts have already been downgraded. Since expectations for the economy have bottomed out, the effect of lowering economic sensitivity in the portfolio will be limited. Sectors with expected operating profit margins this year lower than the average operating profit margin since 2011 appear to be safer. Among the 25 sectors excluding insurance, which lacks sales consensus (average forecast by securities firms), only three sectors meet this condition: chemicals, steel, and retail," he pointed out.

Researcher Park analyzed that value plays in sectors with no earnings expectations would be effective. He said, "Value plays will be effective since Trump's inauguration. Following momentum during a period of earnings decline will not be beneficial. Stocks should not be bought when conditions are good, but when they cannot get any worse. The first quarter of this year will be a good time to increase domestic stocks," he emphasized.