20160121-三星证券-Perspectives_Weekly_23页_989kb

报告摘要

Samsung Market Strategy Summary

Core Content

This document outlines the market strategy and analysis for the Korean and global stock markets, focusing on valuation trends, sector performance, and the potential for reclassification of Korea as a developed market. It is authored by Seung Min You, Chief Strategist, and Dong Yeol Moon, Research Associate at Samsung Securities.

Main Points

Systemic Risk and Market Trauma

Systemic risk is unlikely to resurface due to stronger global macro fundamentals compared to past crises (e.g., 1998 Asian currency crisis, 2008 US financial crisis, 2011 European fiscal crisis).
Stock market swings in 2016 are attributed to investor trauma from previous crises, and markets are expected to normalize as investors refocus on fundamentals.
Oil prices are a critical variable influencing stock trends. Depressed oil prices could slow Fed rate hikes and may prompt the ECB to ease monetary policy, potentially halting the stock downtrend.
Corporate earnings growth forecasts have been falling since mid-2015, which could limit the magnitude of stock rebounds.

Korean Stock Market Analysis

Korean stocks are undervalued and have entered oversold territory, especially in terms of price-to-book (P/B) ratio, currently at a post-2009 low.
Despite a relatively smaller decline in the MSCI Korea index compared to the MSCI DM and EM indices, the market has still fallen 8.23% in USD terms.
The Korean government is pushing for MSCI Korea to be reclassified as a developed market, with an expected upgrade in June 2018 if the process begins in June 2016.
MSCI Korea's reclassification could bring in significant foreign inflows, similar to the impact seen when Portugal and Greece were upgraded.
The Kospi P/E ratio is near its historical average, but the P/B ratio is at a post-2009 low, suggesting undervaluation.

Sector Performance and Valuation

Energy, chemicals, consumer staples, insurance, and utilities sectors show solid earnings momentum and attractive valuations.
Auto and banking sectors have seen weakened earnings momentum, with the former experiencing a decline in the past week.
MSCI Korea sectors show varied performance in terms of P/B, EPS growth, and ROE, with some sectors like Energy and Chemicals experiencing significant changes in forecasts.

Fund Flows

Global funds have shown inflows into developed markets and outflows from emerging markets.
Domestic equity funds have turned to a net inflow following the recent market decline.

Key Information

Market Valuation Metrics

Kospi P/E ratio: Near historical average.
Kospi P/B ratio: At a post-2009 low, indicating potential undervaluation.
MSCI Korea P/B: Below 0.9x, suggesting a trading buy opportunity.

Earnings Forecasts

Forward EPS growth for MSCI Korea has been cut significantly, with little expected improvement in the near term.
One-off gains in 2015, particularly in the utilities sector (e.g., Kepco), are a key reason for the current forecast decline.
Energy and materials sectors have taken the brunt of the earnings cuts due to falling oil prices, but the impact appears to be stabilizing.

Potential Impact of MSCI Reclassification

An upgrade to MSCI Developed Market (DM) status would enhance qualitative valuations and international awareness of Korean blue chips.
However, it may also lead to outflows from emerging markets and overemphasis on large caps.
The reclassification process takes about three years from being added to the watch list.

Sector Valuation and Momentum

Energy: Strong earnings momentum, but P/B is at a post-2009 low.
Chemicals: Solid earnings momentum, with attractive valuations.
Consumer Staples: Positive momentum, with improved ROE.
Auto & Parts: Earnings momentum has weakened, but valuations are still attractive.
IT: Mixed momentum, with some stocks showing improvement in valuation and earnings.
Financials: Banks show positive momentum, but insurance and securities have seen declines in EPS forecasts.

Stock Screening: EPS Forecast Changes

Large Caps: Top performers include Hanmi Pharmaceutical, Samsung SDI, KT, and Celltrion, with positive EPS forecast changes.
Bottom performers among large caps include Samsung Electronics, SK Telecom, and Hyundai Heavy Industries, with negative EPS forecast changes.
Mid Caps: Top performers include Chong Kun Dang Pharm., OCI Materials, and KB Insurance, while bottom performers include LG Life Sciences and OCI.
Small Caps: Top performers include Hanjin Shipping, NHN Entertainment, and Seoul Semiconductor, with significant EPS forecast increases.
Bottom performers include CJ Freshway and WeMade Entertainment, with negative EPS forecast changes.

Conclusion

The Korean stock market is currently undervalued and presents a trading buy opportunity. While global macro fundamentals are strong, and systemic risk is low, the decline in earnings forecasts and manufacturing sector weakness may limit market rebounds. The potential reclassification of Korea as a developed market by MSCI could significantly impact foreign investment flows and market valuations.

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