KOSPI Trading Range Investment Points: "Opportunity for Rebound in Sectors That Underperformed the Index"

As the upward momentum of the KOSPI has recently weakened and the possibility of a trading range is emerging, there is a recommendation to pay attention to sectors that underperformed the KOSPI in the previous quarter.

On August 25, Lee Jaeman, a researcher at Hana Securities, stated in a report titled "When Interest Rates Dominate the Index, What Strategy Works?" that "although the upward momentum of the index has weakened, given that we are in a phase of expanding liquidity, there will be no significant change in the bullish market trend." He predicted that the KOSPI is likely to converge within its historical quarterly average return band of -7% to +7%.

Generally, the S&P 500 index is hindered by high market interest rates, while the KOSPI is blocked by a high won-dollar exchange rate. However, since global liquidity continues to increase, he believes that any decline in the index will be limited. The possibility of a policy rate cut at the September Federal Open Market Committee (FOMC) also supports the validity of the ongoing global liquidity expansion.

Regarding stock selection ideas within the KOSPI, Lee recommended focusing on companies whose foreign ownership ratios have declined compared to their annual highs, explaining, "With rising US expected inflation and falling real interest rates, if the 10-year US Treasury yield declines, a weaker dollar and stronger won scenario will form." He also advised paying attention to companies whose price-to-earnings ratios (PER) have fallen compared to their annual highs, stating, "When the 10-year US Treasury yield falls, the KOSPI's PER also rises."

Lee further explained, "Earnings can be classified from two perspectives," and recommended "increasing the weight of companies such as HD Hyundai Heavy Industries, Hanwha Ocean, and LG Chem, which are expected to see net profit growth based on strong pricing power, as well as Samsung Electronics, Celltrion, and Kumho Petrochemical, which are expected to improve profits based on inventory depletion."