Hana Securities: "KOSDAQ and Dividend Stocks in Focus for May Stock Market"

For the stock market in May, there is an outlook suggesting that investors should pay attention to the KOSDAQ, as well as small- and mid-cap stocks and dividend stocks.

On April 30, Lee Kyungsoo, a researcher at Hana Securities, explained, "Empirically, when both fundamentals (earnings) and sentiment (foreign inflows) are weak, the KOSDAQ index tends to deliver the highest performance compared to other styles and factors."

Lee Kyungsoo noted, "In the ongoing first-quarter earnings season, the operating profit of the 41 companies with consensus estimates is reaching KRW 35 trillion, which is a positive surprise. However, these results do not yet reflect the impact of tariffs, so there is a possibility that annual earnings estimates may be revised downward."

He further advised that during periods when both earnings and inflows are sluggish, the KOSDAQ market may be advantageous. He stated, "The KOSDAQ index has the following additional momentum: it is relatively less affected by concerns over tariffs. There are also past cases, such as during the Moon Jae-in administration, when policies focused on distribution and support for small and venture businesses led to significant outperformance by the KOSDAQ."

Lee Kyungsoo recommended paying attention to high-dividend stocks with a low export ratio in May. He cited Seegene, Emart, Orion Holdings, Hanwha Solutions, HD Hyundai Mipo, Doosan, and Kangwon Land as related stocks.

He stated, "I would like to maintain interest in 'high-dividend' stocks," adding, "Korea's shareholder return ratio has been steadily increasing, and recently, a proposed amendment to the Income Tax Act has been submitted to apply separate taxation on dividend income for companies with a dividend payout ratio of 35% or higher."

He went on to say, "The next administration will inevitably have to be proactive in 'value-up' initiatives, which are the only solution for index re-rating. Therefore, in the May model portfolio, the key alpha strategy is to focus on the KOSDAQ, which currently has a low proportion of export companies, and to incorporate earnings stocks, high-dividend stocks, and payout ratios."