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Samsung Model Portfolio Summary (March 2016)

Core Content

This document outlines the performance and strategic adjustments of the Samsung Model Portfolio for March 2016, highlighting its relative performance against the Kospi index and the rationale behind portfolio changes. It emphasizes the cautious approach to market movements in light of global economic uncertainties and policy expectations.

Main Points

Portfolio Performance vs Kospi

• February Performance: The Samsung Model Portfolio gained 0.76%, outperforming the Kospi by 52 basis points (bps).
• YTD Performance: The portfolio has seen a decline, with the Kospi down by 3.78% and the Samsung Model Portfolio down by 2.79% over three months.
• Relative Performance: The portfolio's relative performance to the Kospi was 1.63% over three months and 6.11% over twelve months.

March Outlook

• Market Conditions: Global stock markets have been affected by oil price weakness, recession fears, and poor corporate earnings, leading to a decline in the Kospi.
• Policy Impact: Anticipated policy responses from central banks, including delayed US rate hikes, further quantitative easing by the ECB and BOJ, and China's fiscal policy resumption, are expected to support a market rebound.
• Recommended Strategy: Increase exposure to large caps, value stocks, and defensive plays. However, a prolonged bull run is unlikely due to limited corporate earnings growth.
• Kospi Target Range: The target range for the Kospi in March is 1,880–2,020.

Key Portfolio Changes

• Increased Exposure: The industrial goods and materials sectors are increased by 1% each, reaching 14% and 12%, respectively.
• Decreased Exposure: The consumer staples and financials sectors are decreased by 1% each, reaching 7% and 8%, respectively.
• Added Companies:
  • Hyundai Development Co
  • KCC
  • Hankook Tire
  • GS Home Shopping
  • Youngone Corporation
  • KT&G
  • S&T Dynamics
  • Kolao Holdings
• Removed Companies:
  • Hyundai E&C
  • Mando
  • Mode Tour Network
  • Lotte Chilsung
  • LG Hausys
  • CJ O Shopping
  • Cosmax
  • LG Innotek

Portfolio Weighting Adjustments

• March Beta: Set at 1.05, down from 1.07 in February.
• Sector Weightings:
  • Consumer discretionary: 22% (from 22% in February)
  • Consumer staples: 7% (from 8% in February)
  • Energy: 3% (from 3% in February)
  • Financials: 8% (from 9% in February)
  • Health care: 3% (from 3% in February)
  • Industrials: 14% (from 13% in February)
  • IT: 25% (from 25% in February)
  • Materials: 12% (from 11% in February)
  • Telecom services: 2% (from 2% in February)
  • Utilities: 4% (from 4% in February)

Key Information

Investment Strategy

• Value and Defensive Plays: The portfolio recommends focusing on value stocks and defensive plays due to heightened macroeconomic uncertainties.
• Policy-Driven Rebound: Investors are advised to prepare for a policy-driven rebound by increasing weightings on large caps and value stocks.
• Corporate Earnings: Strong corporate earnings are needed to sustain market uptrends, which are not expected soon.

Risk Management

• Active Risk: The active risk is calculated as the difference between the portfolio weighting and the Kospi weighting.
• Sector Adjustments: The portfolio is OVERWEIGHT in consumer discretionary, energy, industrial goods, and materials, while being UNDERWEIGHT in consumer staples, financials, telecom services, and IT.

Stock Picking

• Increased Exposure: LG Electronics, AmoreG, and Hyundai Glovis are increased in exposure.
• Decreased Exposure: Hyundai Heavy Industries, Hyundai Motor, CJ E&M, and Samsung Fire & Marine are reduced in exposure.

Conclusion

The Samsung Model Portfolio for March 2016 reflects a cautious and strategic approach to the market, emphasizing value and defensive stocks while adjusting sector allocations based on macroeconomic expectations and corporate performance. The target range for the Kospi is set to 1,880–2,020, and the portfolio is expected to benefit from policy-driven rebounds, although a prolonged bull market is not anticipated.