Department store-related stocks were rising in early trading on the 5th. The gains come as the recent stock market rally has raised expectations for improved earnings in consumer-related sectors. Prospects for higher sales on the back of an increase in foreign tourists are also buoying investor sentiment.
As of 9:52 a.m. that day, Hyundai Department Store was trading at 146,200 won, up 6,400 won (4.58%) from the previous session. At the same time, Shinsegae was up 2,000 won (0.30%) at 661,000 won. In early trading, Hyundai Department Store and Shinsegae climbed to 155,900 won and 729,000 won, respectively, hitting record highs.
Convenience store operators BGF Retail (2.25%) and GS Retail (0.64%), among others, were also gaining.
Analysts say a rotation into department store shares is underway as the recent strength in asset markets has fueled expectations that consumers will have more spending power. There are also views that larger bonuses tied to an improved semiconductor cycle could lead to stronger luxury spending. In line with that, some expect department stores in the southern Gyeonggi commercial districts, where Samsung Electronics and SK hynix business sites are located, to benefit.
Lee Jinhyeop, an analyst at Hanwha Investment & Securities, said, "The distribution sector showed strength centered on department stores in the first half, and we expect that trend to continue into the second half," adding, "We recommend building portfolios around department stores, which are achieving structural growth in both domestic consumption and sales to foreign tourists."
He added, "The qualitative growth effect of convenience stores has been proven in earnings since the second half of last year," and "As the overall convenience store industry shifts from quantitative to qualitative growth, operating leverage is expected to continue."