Top-tier stocks switching places as IT gains traction
Looking at the local stock market recently, the leading shares seems to have changed. Machinery and shipbuilding stocks that were big winners last year have suffered significant declines, while information technology shares are slowly rising after being neglected last year. Hyundai Heavy Industries, the world’s biggest shipbuilder, has seen its stock price go down 30 percent so far this year. The stock underperformed the benchmark Kospi, which is off 14 percent. However, Samsung Electronics, the leading IT stock, went up 7 percent in the same period. The securities houses anticipate that Samsung and Hyundai will see their operating profits rise by 31 percent and 41 percent this year, respectively. Just looking at the forecast, the movement of the two shares does not make any sense.“This is a result of different expectations for the two issues,” said Hwang Geum-dan, an analyst at Samsung Securities. Just a month ago, the estimate for Hyundai’s earnings per share rose 60 percent from a year earlier. However, the earnings per share estimate for Samsung fell 15 percent in the same period. This reflects the diverging paths of the two companies last year. The market’s expectation for Hyundai was very high, while for Samsung it hit bottom.
With world stocks tumbling due to the subprime mortgage crisis in the United States, things have changed. Shares that were counted on before are now watched with concern.
“Information technology shares were in a slump last year and they are now in the process of recovery,” Hwang said.
Others believe it is too early to say that the leading shares have switched places.
“Rather than changes in the leading shares, more issues are joining the leading group,” said Lee Jin-woo, an analyst at Mirae Asset.
By Kim Seon-ha JoongAng Ilbo [jbiz91@joongang.co.kr]
with the Korea JoongAng Daily
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