Daishin Securities advised, as a first-half investment strategy to respond to KOSPI volatility, to watch the uptrend and maintain equity exposure until forward earnings per share (EPS) turns down.
It also said that, in the short term, a "blocking the crossroads strategy" for relatively less-risen sectors—such as domestic demand stocks and growth stocks that have not ridden the foreign and National Pension Service buying—would be effective, rather than sectors that have risen a lot.
Lee Kyung-min of Daishin Securities cited the normalization of valuation (corporate value) as a key driver of the KOSPI's rise at the "KOSPI volatility utilization strategy webinar" held on the 24th.
Policy expectations and a surge in financials also acted as drivers of the market's rise. Lee said, "The likelihood of the third Commercial Act amendment bill passing at the end of this month has come to the fore, and ahead of that, corporations that disclosed share cancellations emerged, amplifying expectations," adding, "As expectations for policy materialized, financials skyrocketed in a rotational market."
Lee expected further upside in KOSPI valuation. Lee said, "Although the KOSPI index has broken through 5,800, the forward price-earnings ratio (PER) is 10.8 times, which is still inexpensive compared with the United States or Taiwan, where it is over 20 times."
As a signal that the KOSPI uptrend could turn, he pointed to the 2027 earnings growth rate. Lee said, "As this year's results level up, the 2027 earnings outlook may not rise quickly."
Daishin Securities forecast next year's KOSPI net profit change rate at 13.4% and the semiconductor net profit change rate at 11.4%. Based on the current situation, it sees the uptrend continuing because there is no evidence that earnings growth will stall.
For sectors with high potential for future rotation, it suggested undervalued domestic demand stocks and growth stocks. Since December last year, there have been few sectors with returns better than the KOSPI, such as securities, semiconductors, defense, and automobiles.
Conversely, Daishin Securities judged that hotels and leisure, internet, chemicals, cosmetics, displays, and pharmaceuticals and biotech, as well as consumer staples, have undervaluation appeal because of poor results.
It interpreted foreign selling as part of a rebalancing process. In fact, last month foreigners sold 11 trillion won worth of stocks in the semiconductor and automobile sectors, but bought 11 trillion won across 23 sectors. This month, while selling semiconductors, they are showing net buying in 17 sectors.