There's not even a 1% sign that semiconductors will decline." Why it's hard to make a profit without Samsung Electronics and SK Hynix | Hong Seon-ae, Lee Han-young, Head of Report Fund Asset Management [Yeouido Insight]

Summary

Lee Han-young, Head of Report Fund Asset Management, argues that Samsung Electronics and SK Hynix are still undervalued due to a structural valuation re-rating from PBR to PER, supported by long-term supply agreements and strong liquidity. He also highlights Hyundai Motor's robotics-driven multiple expansion. While other sectors like semiconductor substrates and infrastructure have solid fundamentals, they lack liquid investment vehicles. He advises investors to cut non-core holdings and rotate into leaders, while preparing for 5% daily swings as normal in a larger market.

• Samsung Electronics and SK Hynix benefit from long-term contracts that stabilize earnings and justify higher multiples.
• Hyundai Motor is re-rating as the market prices in its robotics OEM potential.
• Domestic liquidity (M2) and new leveraged ETFs are driving strong inflows into Korean stocks.
• Foreign selling is largely index rebalancing; foreign ownership ratios are still rising.
• Semiconductor substrates, shipbuilding, defense, and power equipment sectors have good earnings but are less liquid.
• Retail sector earnings are strong from consumption and tourism, but institutional liquidity is limited.
• The KOSPI may experience daily swings of 5% due to larger market cap, but these are normal.
• Investors should use pullbacks to add to leaders rather than chase non-core holdings.