Dollar Decline Increases Likelihood of 'Earnings'-Based Individual Stock Market Scenario

Hana Securities recently suggested that amid increasing volatility in the global asset market and the notable decline in the dollar index, investors should adopt a 'performance-based leading stock pullback betting strategy' rather than focusing on indices. Specifically, they highlighted HD Hyundai Mipo, Hanmi Semiconductor, Hanwha Solutions, Hanwha Engines, LG Chem, JYP Ent., Korea Gas Corporation, among others.

On the 12th, Lee Kyung-soo, a researcher at Hana Securities, stated in the report titled "Dollar Decline, Market Sentiment Impact?" that "the dollar decline tends to lead the domestic market sentiment toward individual stock trends."

Lee noted, "Among the main indicators during the recent phase of increased volatility in the global asset market, the dollar index showed the largest decline (minus 3.5% in March)," and recalled that "the asset class with the highest performance during the dollar index decline was emerging market stocks." However, he also emphasized that during systemic risk periods such as the trade war following the inauguration of U.S. President Donald Trump in 2017, emerging market (EM) indices experienced a larger decline compared to developed market (DM) indices.

Accordingly, Lee analyzed that in the current situation, where concerns about trade wars and economic recession have surfaced after the start of Trump's second term, an 'alpha' strategy that approaches the styles favored during dollar declines rather than making judgments based on indices could be positive. He evaluated, "Styles that showed a high inverse correlation with the dollar decline included top credit margin, high beta, trading volume, top individual net purchases, and stocks with excessive price declines," and added, "The domestic stock market is likely to be an individual stock market based on 'performance.'"

He continued, "Considering the above styles, a 'performance-based leading stock pullback betting strategy' is the current alpha strategy," mentioning HD Hyundai Mipo, Hanmi Semiconductor, Hanwha Solutions, Hanwha Engines, LG Chem, JYP Ent., Korea Gas Corporation, HD Hyundai Electric, Isu Petasys, HPSP, Hanwha Ocean, Samsung E&A, Samsung SDI, Daehan Cable, Hyosung Heavy Industries, KEPCO Engineering & Construction, APR, Kakao Pay, LIG Nex1, LS ELECTRIC, and Doosan as the top stocks selected based on a quant model assuming a dollar decline.