It's summer. The weather is hot and humid. The securities market senses the change of seasons in the rising stock prices or changes among the top traded stocks. Summer theme stocks are noticeable. Manufacturing companies for air conditioners and dehumidifiers, along with the retailers distributing them, ice cream and frozen dessert companies, and alcoholic beverage companies represent typical examples.
When the heat arrives, investment funds flock to stocks expected to perform well. This is due to the anticipation that stock prices will rise. However, will the prices of summer theme stocks indeed show an upward trend as summer deepens? Upon examination, the answer was no. To conclude, it is necessary to buy a little earlier.
On the 5th, ChosunBiz analyzed the monthly revenue (the rate of change in closing price compared to opening price) of 5 stocks considered summer theme stocks, including LOTTE HIMART, Binggrae, WINIX, PASECO, and HiteJinro, for the years 2020 to 2024.
First, looking at HiteJinro, the average revenue for July and August, when beer sales peak, were -5.07% and -3.84%, respectively. June was higher at 0.83%.
PASECO and WINIX, which manufacture and sell dehumidifiers and air conditioners, exhibited the same trend. PASECO's average revenue for July and August was -4.49% and -15.71%, while WINIX's was -12.25% and -2.74%, respectively. Both performed worse than their average revenue in June (-4% and -0.54%). LOTTE HIMART and Binggrae also had higher average revenues in June compared to July and August.
Summer theme stocks tend to show a favorable price trend when purchased in colder periods before the heat rises. In the case of Binggrae, the average revenue for November and December over five years was 2.3% and 3%, respectively. From January to March, the performance was relatively stagnant, while April and May saw revenues of 8.6% and 5.3%. From June to October, the average revenue was negative.
If you are aiming for a 'quick profit' investment, the peak price may be more important than the monthly revenue. However, even considering year-to-date peaks, July and August were not particularly significant months for summer theme stocks. Among the five stocks, the months with the highest ratios of achieving year-to-date peaks were February and June at 28% each, followed by January at 24%. July had only one case in 2021 for PASECO (4%), and there were none in August.
For the period from June to August, as the heat continues, I narrowed down the stock price trend. The peak ratio was overwhelmingly high in June at 68%. In July, it was 12%, while August and September saw only 4% each. Thus, summer theme stocks tend to lose strength when the heat actually arrives.
Upon reconsideration, this may be an expected outcome. The market always reflects opportunities and crises in stock prices first. Additionally, it is impossible for seasonality to override all the business activities of corporations and domestic and foreign variables.
Also, it should be noted that the Korean market has experienced the 'curse of the second half' over the past decade. The KOSPI index only rose in 2020, showing an average decline of -3.7% in the second half. As the market cools down, summer theme stocks cannot be exceptions.
What about this summer? While concerns over the tariff policies of the Donald Trump administration in the U.S. remain, there are also opinions that the atmosphere could be different. Since foreign investors have begun net buying, the Korean stock market entered a bullish phase from June.
Particularly, after the inauguration of Lee Jae-myung's government, a supplementary budget has been prepared under the slogan of 'revitalizing domestic demand'. Securities firms assess that this year's first half has seen significant price increases for export-oriented stocks such as shipbuilding, defense, and cosmetics, suggesting that sectors like construction, food, and distribution with relatively smaller price increases could perform well.
Whether summer theme stocks have broken free from their jinx will likely become clear only when the heat subsides. To prevent investment funds from melting under the summer sun, wisdom is needed to move ahead without being trapped in themes. I hope that both health and accounts can be preserved against the heat.