Second Half Small-Cap Bull Market, the Era of Tenbaggers Is Coming: Stocks Foreigners Are Targeting — This Is the Signal for a Foreign Buying Reversal

Summary

LS Securities Center Head Shin Jungho outlines a second-half Korean small-cap bull market thesis, driven by foreign inflows, shareholder-friendly legal reforms, and low-PBR activist targets. He recommends a balanced portfolio anchored in Samsung Electronics and SK hynix, supplemented with bank/insurance, small-cap value, and shipbuilding/defense. Hanwha Ocean's recent dip is seen as a medium-term buying opportunity.

• Foreign selling in Korea may ease and eventually reverse into buying if Fed rate expectations shift, boosting KOSDAQ small caps.
• A commercial law revision empowering shareholders opens the door for activist hedge funds to target cash-rich, low-PBR small-cap companies.
• Small-cap value stocks with low PBR, high cash, and strong operating cash flow could deliver tenbagger returns regardless of the business cycle.
• Samsung Electronics and SK hynix are recommended as a core 40-50% portfolio allocation, expected to at least track the market.
• Korean bank and insurance stocks are favored over securities as defensive positions benefiting from high rates and shareholder return policies.
• Shipbuilding and defense sectors retain strong medium-term order momentum; Hanwha Ocean's contract loss is seen as a short-term overreaction suitable for holding if the horizon exceeds six months.