Eugene Investment & Securities: "Sorting the Wheat from the Chaff Accelerates... Defense, KOSDAQ, Semiconductors Among Promising Sectors"

Trading and Capital Goods (Defense), KOSDAQ, Energy, Construction, Securities, Automotive, and Semiconductors Remain Promising
Hotel & Leisure, Software (SW), Essential Consumer Goods, and Utilities Remain Vulnerable

Eugene Investment & Securities released a report titled "Industries to Keep and Industries to Discard" on March 9, analyzing that the so-called "sorting the wheat from the chaff" between industries that will maintain their weighting in the domestic stock market and those that will not is likely to become more pronounced in the wake of the recent Iran war.

Heo Jaehwan, a researcher at Eugene Investment & Securities, stated, "To estimate the resilience of individual stocks, it is necessary to compare the decline caused by this shock with the price increase seen in January and February of this year." He added, "Industries where the decline is smaller relative to the previous gains are more likely to withstand the current volatility."

He further emphasized, "Among major domestic industries, trading and capital goods, KOSDAQ, energy (refining), construction, securities, semiconductors, and IT appliances (secondary batteries) managed to preserve their gains this year even during last week's sharp market decline," and noted, "These can be seen as sectors likely to maintain their leadership going forward."

In contrast, he evaluated that "hotel and leisure, software (SW), essential consumer goods, utilities, and media sectors have either given up most of their gains from January and February or have fallen even more than their earlier gains," adding, "These are sectors vulnerable to external variables."

He also diagnosed that "sectors such as retail and insurance, which were strong in January and February but have since retreated again, can be considered relatively vulnerable in this phase of volatility."

Heo concluded, "Although the stock market situation can change at any time depending on the course of the war, when looking at the relative strength compared to the KOSPI, sectors such as trading and capital goods (defense), KOSDAQ, energy (refining), construction, securities, automotive, and semiconductors are industries that should be protected even amid such volatility."

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