Lee Ho-geun, a manager at MBN Gold, said the upward trend in US long-term Treasury yields is likely to continue, and that the refining and insurance sectors deserve attention.
Lee Ho-geun, a manager at MBN Gold, said the upward trend in US long-term Treasury yields is unlikely to ease quickly. He explained that this rise in yields is acting as a drag on the stock market and is causing investment capital to flow out.
Lee Ho-geun analyzed that while US stock markets are at high price levels, large-cap Korean semiconductor stocks such as Samsung Electronics and SK Hynix are relatively undervalued. He said they may struggle for now, but over time their intrinsic value will recover.
Lee Ho-geun noted that news has emerged that diesel margins have topped $100 a barrel. He explained that this is a positive signal for the refining sector, raising expectations for earnings improvement at related companies.
He added that these factors are disrupting global refined product supply, which is leading to strength in the refining market.
Lee Ho-geun said European gas inventories have fallen to near their lowest levels. Taking this together with developments among US refiners, he forecast that strength in the global refining market will continue. He added that domestic related stocks could also be expected to hit new highs.
Lee Ho-geun noted that the yield on the US 30-year Treasury has reached its highest level since 2007, and stressed that the financial sector, especially insurance, needs close attention. He expects rising rates to have a positive effect on insurers' profitability.
Lee Ho-geun explained that the insurance industry was the sector hit hardest by the earlier period of low interest rates. However, as rates have entered an upswing, the industry is showing signs of recovery, and the discount rates on related companies' liabilities have begun to rise. Overall, he analyzed that the insurance industry is shaking off its slump and turning toward an uptrend.
He explained that by receiving crude oil stably through Aramco, the company enjoys high operational stability.
Lee Ho-geun forecast that S-Oil posted decent results in the second quarter and that third-quarter results will be better than the second. He expects the uptrend in refining margins to last a long time rather than ending in the short term, so S-Oil's share price could also stay strong for an extended period.
Because it takes time for refining facilities to fully recover, this suggests a positive view on refiners can be maintained even after the conflict ends.
As an investment strategy for S-Oil, Lee Ho-geun suggested buying at the current price. He said a target price of 170,000 won and a stop-loss of 120,000 won would be a sound approach.
Lee Ho-geun explained that Hyundai Marine & Fire's accounting profit has risen sharply due to a recent accounting change. He added that earnings are also improving significantly as excessive medical treatment is being reduced and premiums on actual-loss medical insurance have been raised.
He analyzed that this shift will act as a significant positive factor for insurance stocks.
He set a target price of 56,000 won and a stop-loss of 41,000 won.
Answers come from the transcript, with the exact spot cited.
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