While favorable PMI indices, a strong cryptocurrency market, and positive biotech clinical trial news have led a market rebound, the pharmaceutical and biotech sector sees long-term bright prospects due to an aging society and the Biosecurity Act. Amid pressure for U.S. interest rate cuts and the necessity of nuclear energy, GS E&C's financial improvement and order status are drawing attention, with short-term trading strategies being emphasized.
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During the recent correction in the large-cap stock market, Manager Choi Chang-rim suggested considering buying Samsung Electronics and SK Hynix below specific price levels. He proposed buying Samsung Electronics when it drops below 250,000 won and SK Hynix when it falls below 1,500,000 won. This strategy assumes that aggressive low-price buying will enter the market if the market index declines.
Currently, large-cap stocks, including Samsung Electronics and SK Hynix, are experiencing high volatility, making investment difficult. As stock prices repeatedly go down and then up, the risk of losses for both inverse and leveraged investments is increasing. Ultimately, stock prices tend to move within a consolidated range, suggesting that the expected rate of return from large-cap investments may decrease.
The current market's supply and demand are shifting from top market capitalization stocks to small and mid-cap stocks. This shift is expected to make the movements of small and mid-cap stocks more active, potentially leading to a sharp rise in the KOSDAQ market. In contrast, Samsung Electronics is projected to consolidate at its current price level for a while before attempting a rebound.
Now is the time to carefully watch the pharmaceutical and biotech sector. Since many companies have unstable financial structures, it is crucial to invest primarily in financially stable companies with positive news. The pharmaceutical and biotech sector is likely to show strength during interest rate cut periods. The secondary battery sector is also expected to maintain a positive trend.
The recent market rebound was largely driven by favorable PMI indices. Additionally, Bitcoin gained strength on expectations of cryptocurrency legislation, leading to a concurrent rise in related stocks such as Coinbase. Positive late-stage clinical trial results for vaccines like Moderna also spread a positive sentiment throughout the biotech sector, adding warmth to the market.
The pharmaceutical and biotech sector is a field that warrants continuous attention from a long-term perspective. South Korea's entry into an aging society is a major driver for the sustained growth of the pharmaceutical and biotech industry. Furthermore, the advanced biotech field has high technological barriers that China cannot easily overcome, and the implementation of the U.S. Biosecurity Act, which strengthens biotech sanctions against China, is analyzed to positively impact the biotech industries of the U.S. and its allies.
U.S. national debt has exceeded 50 trillion won, and annual Treasury interest expenses now surpass the national defense budget. Interest expenses being higher than defense spending, which accounts for approximately 14% of national finances, signifies severe fiscal pressure. To reduce this enormous interest burden, the U.S. is inevitably facing a situation where it must cut interest rates. While interest rate cuts can lower corporate financing costs and stimulate investment, contributing to economic revitalization, they could also reignite inflation concerns.
While GS E&C is not currently showing direct movement as a nuclear-related stock, it has experience participating in the construction of Shinwolsong Units 1 and 2, and Shinhanul Units 1 and 2. Notably, by the end of 2025, the company plans to upgrade its existing nuclear business team to establish a nuclear business division. This division will be responsible for developing not only large-scale nuclear power plants but also small modular reactors (SMRs), which is expected to strengthen its position in the nuclear energy market in the future.
Despite being a nuclear-related stock, GS E&C's stock price has shown minimal movement, but the company's financial condition is undergoing positive changes. After operating at a loss in 2023, it successfully transitioned to profitability starting in 2024 and continues to maintain profitable operations. This trend of financial improvement is expected to further expand in the future. Additionally, the company secured orders worth 7.5 trillion won in the first half of the year, which is assessed as having secured the company's growth momentum.
Nuclear energy is set to be fully commercialized starting in 2030 and is currently attracting attention as virtually the only sector capable of meeting surging electricity demand. Renewable energies like solar and wind power are seen as playing a transitional role until nuclear power becomes fully commercialized. While big tech companies are also increasing investments in renewable energy such as solar power, the importance of nuclear energy is growing even more when considering the high oil price volatility risks of current fossil fuel power generation.
In the current highly volatile market, it is emphasized that investors must realize profits as soon as they occur. Since profits often disappear quickly if not taken in time, short-term trading with quick entry and exit is effective. Manager Choi Chang-rim stated that he is responding to these market conditions through daily trading using opening and closing prices.
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