Int'l Insights: Pullback Opportunities in S. Korea
Pullback opportunity in South KoreaThe two-month pullback in Korea has created buying opportunities. In fact, this recent weakness is largely confined to auto and financial stocks, masking strength in other segments, such as tech and materials, where bullish inflections are visible.
In this report we highlight actionable themes and individual names within Korea including:
• Tech continues to lead. Bullish inflections are visible in the charts of: Samsung Electronics (005930-KR), SK hynix (000660-KR), NCsoft (036570-KR), Samsung Electro-Mechanics (009150-KR). Buy.
• Avoid financials. Most banks and insurers exhibit weak relative strength trends. This is visible in names like Shinhan Financial Group (05550-KR) and KB Financial Group (105560-KR). One exception: Industrial Bank of Korea (024110-KR), which is rebounding off support and its 200-day MA.
• Commodity sectors contain pockets of strength. Chemicals, in particular, are emerging from long-term bases patterns, including LG Chem (051910-KR), Lotte Chemical (011170-KR), and Hanwha Chemical (009830-KR). Within energy, SK Innovation (096770-KR) offer an attractive pullback above base support.
• Shipping stocks are emerging from long-term bottoms. A handful of shipping stocks are slowly emerging from multi-year bottoming patterns. Attractive set-ups include: Pan Ocean (028670-KR) and Korea Line (005880-KR).
• Other attractive names: Samsung SDS (018260-KR), Kakao (035720-KR), and Korea Zinc (010130-KR).
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Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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