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Analysts are still betting on semiconductors

June 26,2018
Stock market analysts named semiconductors and goods sought after by Chinese consumers as promising sectors for investment in the second half of the year in their predictions given to Yonhap on Monday.

Heads of research divisions at seven local securities companies, all with capital of more than 3 trillion won ($2.69 billion), were contacted by Yonhap for their recommendations. The general consensus was that the market will do better in the second half, but uncertainties from external factors still persist.

IT and semiconductors were the projected gainers overall - both industries are on track to grow and see the earliest market climb once foreign demand picks up.

Yang Ki-in of Shinhan Investment picked Samsung Electronics and SK Hynix, predicting strong momentum in performances from the third quarter onward for semiconductors.

“The exchange rate is favorable,” he said, “and once foreign funds start to come in, they are likely to be the biggest beneficiaries.”

Shin Dong-suk of Samsung Securities named the same two companies.

“Increased demand for semiconductors related to data and supply shortage is continuing,” he said.

IT and chips were also preferred by Lee Chang-mok of NH Investment & Securities and Yoon Hee-do of Korea Investment & Securities.

“The momentum for IT is currently at its nadir,” Lee said, “but we expect a hike in chip prices from increased consumption in advanced countries toward the year-end and better corporate performances in the third quarter.”

Yoon similarly foresaw improved profits from the price increase in DRAM and higher profits for semiconductors from more market release of NAND memory.

Other analysts were betting on products that are in high demand by Chinese consumers and by the industrial raw materials and consumption sectors at home.

“There are expected gains for duty-free shops, cosmetics, media and some foods and beverages from improved relations with China, an increase in the number of Chinese travelers to Korea and tariff cuts from next month on imports by China,” Ku Yong-uk of Mirae Asset Daewoo.

Shin of Samsung Securities agreed that consumer goods may be a good investment due to China’s increasing consumption and general mood of detente in Northeast Asia, especially around the Koreas.

Shinhan’s Yang took note of construction and shipbuilding stocks.

“We expect new valuations in construction from recovery in overseas orders and resumption of inter-Korean economic cooperation,” he said. “For shipbuilding, we predict more orders for LNG carriers and icebreakers from Russia’s Arctic LNG projects.”


Yonhap