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Samsung Model Portfolio Summary - August 2016

Core Content

This document outlines the performance and strategic adjustments of the Samsung Model Portfolio for the month of August 2016, in comparison to the Kospi index. It includes a detailed performance review, sector exposure changes, and specific stock additions and removals based on market analysis and expectations.

Performance Review

The Samsung Model Portfolio showed a 3.60% gain in August 2016, outperforming the Kospi by 1.27% (or 127 basis points). The performance comparison across different time frames is as follows:

Note: The performance figures are as of July 29, 2016.

August Outlook

• Focus shift: The emphasis should move from policy expectations to corporate earnings as the market is expected to be more volatile.
• Brexit impact: While some Brexit-related uncertainties have subsided, the real economic effects are still uncertain and need to be confirmed.
• Kospi outlook: The portfolio expects limited upside for the Kospi in August, with a target range of 1,900–2,020.
• Volatility: Market volatility is anticipated to rise again, and investors are advised to focus on selective stock picking.
• Earnings revisions: Only the transportation, semiconductor, and pharmaceutical industries are expected to see positive earnings revisions, while most other industries, such as retail, consumer staples, and shipbuilding, are expected to experience the opposite.

Key Changes to the Portfolio

Sector Exposure Adjustments

• Increased exposure:
  • Health care from 0% to 3%
  • IT from 26% to 27%
• Reduced exposure:
  • Industrials from 14% to 13%
  • Consumer discretionary from 19% to 18%
  • Consumer staples from 11% to 10%
  • Financials from 12% to 11%

Stock Additions and Removals

Added:

• Kepco
• Posco
• OCI
• CJ E&M
• Hyundai Home Shopping
• LG Life Sciences
• Posco Chemtech
• Able C&C
• Hana Financial Group

Removed:

• Kogas
• Korea Zinc
• YG Entertainment
• SK Materials
• LG Chem
• GS Home Shopping
• Shinsegae
• Cosmax
• Shinhan Financial Group

Portfolio Beta

• The portfolio beta for August is 1.01, slightly higher than the previous month’s 1.00, indicating a slightly more aggressive stance.

Portfolio Weightings by Sector

Note: The data is as of July 28, 2016.

Summary of Key Portfolio Changes

The portfolio maintains a defensive strategy due to ongoing uncertainties. It increases exposure to health care and IT sectors and reduces exposure to industrials, consumer discretionary, consumer staples, and financials. The focus is on companies with improving earnings, and the model is recommending selective stock picking.

Conclusion

The Samsung Model Portfolio aims to capitalize on improving earnings and manage volatility by adjusting sector exposure and stock selection. The strategic shift reflects the expectation of limited market gains and increased uncertainty, especially related to Brexit and economic fundamentals. The portfolio is designed to be conservative while maintaining a moderate level of exposure to sectors with positive outlooks.