Summary of Korean stock market issues / Korea Battery Analysis

Summary of Korean stock market issues

- The Nasdaq fell on Thursday due to changes in Japan's YCC policy, but rebounded with a 1.9% increase on Friday.

- EV-related stocks, including Tesla, were strong, while Ford and GM were disappointing, saying that the growth of the EV sector was slow, despite better-than-expected earnings.

- Semiconductor industry, Philadelphia Semiconductor Index rose 2.2%, renewed high this year, including Intel, Lam Research, Applied Materials, KLA semiconductor equipment stocks, and Nvidia AMD, which rose after announcing after-hours results last Friday.

- The domestic stock market rose at the same time as the secondary battery semiconductor last Friday, partially reflecting the rebound in the US stock market.

Extreme volatility in the secondary battery industry, but making my own port excluding secondary batteries may not keep up with market changes

A balanced portfolio for semiconductors and secondary batteries, which are leading industries, is needed

It may take some time for the secondary battery week to recover from its peak on July 26, but there will be no adjustment for the vertical drop.

In the semiconductor sector, SK Hynix reported this year, and Samsung Electronics' conference went smoothly, and US semiconductor equipment stocks performed well.

So far, HBM will focus on back-end process related companies, but now it is time to pay attention to the front-end process as well.

Wonik IPS, Eugene Tech, Jusung Engineering, etc. The point at which meaningful growth begins to emerge

In addition, surprises due to the full-scale 2Q earnings season continued to appear even within small and medium-sized industries, Hyosung Heavy Industries, Dongkuk Steel, etc., on Fridays, are overtime capped.


strategy instead.  Quickball:
This is Kyungmin Lee, who is in charge of investment strategy at Daishin Securities.


Summary of today's comments.

1. The long-term growth potential of the secondary battery industry and the visibility of future performance are fully acknowledged.  Daishin Securities also mentioned rechargeable batteries as one of its top picks from its 2023 annual forecast.  However, a reversal of excessive flow is inevitable in the short term.  At this point, it is necessary to consider the investment strategy after the extreme concentration on secondary batteries has developed.

2. The company has already experienced a trend toward secondary battery materials.  In March and April of this year, KOSDAQ secondary battery material stocks continued to rise, extreme psychology and supply-demand bias developed.  In July, a similar situation developed centering on the KOSPI market

3. In the second quarter of 2023 and now, the trend towards secondary batteries is characterized by extreme supply and demand conditions between foreigners and individual investors.  As individual investors' supply and demand is concentrated on secondary batteries, and short covering purchases by foreign and institutional investors are added, soaring and concentration is intensifying.  The point to note here is foreign trade.

4. Foreign investors showed an unchanged trading pattern from March to June 2023.  We bought semiconductors, automobiles, machinery, IT appliances, trading capital goods, shipbuilding, media/education, insurance, and securities sectors, and secondary battery material stocks such as steel, chemicals, cosmetics/apparel, banking, energy, retail (distribution), and China. /Sell domestic consumer stocks

5. As the trend toward secondary batteries becomes more severe, foreign investors sell secondary battery material stocks and strengthen their purchases in existing businesses.  Since then, the concentration of rechargeable batteries has eased, and foreign net purchases recorded strong performances in March and April.  In particular, in May, net buying of the KOSPI in large quantities over KRW 4 trillion restored supply and demand leadership, leading the market rise.

6. Foreigners' trading patterns are similar again.  Foreign investors net sold 1.7 trillion won in the KOSPI for the month of July, but more than 4.5 trillion won was sold in secondary battery material stocks.  On the other hand, foreign investors recorded differential net purchases in industries such as semiconductors (1.73 trillion won), automobiles (485 billion won), shipbuilding (485 billion won), software (387 billion won), transportation, securities, insurance, construction, and cosmetics/apparel.  After secondary battery material stocks turned downward, these industries turned bullish

7. For the time being, mixed ups and downs between secondary battery material stocks and other industries/stocks, and supply and demand battles between foreigners and individuals may continue for a little longer.  In this process, it is necessary to increase interest in the existing leading stocks, semiconductor, automobile, and shipbuilding industries, where foreign net buyers have flowed in, and the software and transportation industries, which have recently switched to net purchase.

8. The key variable now is whether foreign investors will lead supply and demand.  In May, the trigger for net buying by foreign investors and expansion of buying volume was the F/X rate.  Changes in the foreign exchange market similar to those in May are expected this time around.  In August, China's economic instability will subside and economic stimulus policies may materialize.  In this case, it is expected that the weakening of the renminbi will ease, the won will strengthen, and foreign net purchases will strengthen.

9. Opportunity to overweight the aftershock caused by the concentration of secondary batteries.  We suggest an overweight strategy for semiconductors, automobiles, shipbuilding, software, and transportation sectors, where foreign net purchases continue.  Focusing on these industries, KOSPI 2,800 level recovery / attempt to break through is expected

During the week, I was distracted by the rapidly changing market.

Secondary battery material stocks soared and spread at once, then plunged on the 26th, reversed, and then rebounded sharply on the 28th...

In a somewhat dizzy market situation, let's take a look at the future stock market flow and the changes you need to pay attention to.

I will send you a link to the data, so it would be nice to see it like a picture.


#ulsan whale