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Samsung Market Strategy Summary

Core Content

The document outlines the Samsung Model Portfolio strategy for December 2017, focusing on market performance, investment outlook, and portfolio adjustments. It highlights the performance of the portfolio compared to the Kospi index and provides insights into the expected market trends and sector exposure changes.

Main Points

• Market Performance Review (November 2017):

  • The Kosdaq rose by 14.2% over November 1–27, significantly outperforming the Kospi, which edged down by 0.6%.
  • The Samsung Model Portfolio gained 2.13%, outperforming the Kospi by 103bps.

• December Outlook:

  • The US Fed is expected to raise interest rates, but the impact is anticipated to be limited as expectations are already reflected in the market.
  • Domestic selloffs of small-cap stocks in December are likely to be one-off, and risk appetite is expected to grow in 2018.
  • The strategy recommends expanding exposure to cyclicals, small- and mid-caps, and growth stocks.
  • The Kospi target band for December is set at 2,480–2,580.

• Portfolio Rebalancing:

  • The portfolio remains heavily weighted towards cyclical sectors.
  • Exposure to the energy and industrial goods sectors is increased, while the materials sector is reduced.
  • Specific companies are added and removed based on their performance and strategic outlook.

Key Portfolio Changes

Added Companies:

• Pearl Abyss
• Samsung Heavy Industries
• Shinsegae
• Cosmax
• Jeju Air
• Hyundai Engineering & Construction
• Hyundai Mobis
• Samjin Pharmaceutical
• Kogas

Removed Companies:

• Webzen
• LG Household & Healthcare
• LIG Nex1
• Doosan Bobcat
• Hyundai Mipo Dockyard
• Woori Industrial
• Lotte Himart
• Value Added Technology (Vatech)
• Kepco

Adjusted Exposure:

• SK Innovation: Exposure increased from 3% to 4%
• Lotte Chemical, LG Chemical, Loen Entertainment: Exposure decreased

Sector Weightings (December 2017)

Portfolio Performance vs Kospi

Investment Ideas for 2018

1. Cyclicals: Maintain OVERWEIGHT and increase exposure to sectors showing earnings momentum.
2. Small- and Mid-Caps: Shift focus to these as they may benefit from increased economic confidence and earnings improvements.
3. Growth Stocks: Increase exposure due to their attractiveness, especially with potential economic expansion.

Conclusion

The strategy emphasizes a rebalancing approach to take advantage of expected market trends in 2018, with a focus on cyclicals, small- and mid-cap stocks, and growth stocks. The portfolio maintains a strong presence in cyclical sectors, with specific adjustments to reflect changing market conditions and expectations. The overall beta for the portfolio is set at 0.94 for December, indicating a moderate risk profile compared to the broader market.