Bullish trend in global stock markets expected for H2: investment expert

Kim Sung-hwan, senior analyst at Shinhan Investment Corp.

“There is no need to doubt the upward trend in global markets for the latter half of this year,” said Kim Sung-hwan, senior analyst at Shinhan Investment Corp. reiterating his confidence that corporate earnings are expected to improve either until the second half of 2023 or the first half of 2024.

During the ‘2023 Maekyung Wealth Investment Concert’ held on Tuesday, Kim said that in the investment cycle for the U.S. and elsewhere, corporate profits are expected to grow, and related stocks will benefit. He also highlighted the potential in sectors such as semiconductors and construction machinery, alongside the already prominent U.S. Big Tech companies.

Shinhan Investment organized the event on the theme of ‘2023 H2 Global Investment Strategies,’ which was broadcasted on its YouTube channel, Alphatv.

Kim described stock prices as a function of corporate earnings, indicating that regardless of economic fluctuations, rising corporate earnings would invariably drive stock prices higher. He further demonstrated the uptrend by pointing out the growth in the 12-month trailing earnings per share (EPS) of major companies in the U.S. and other key economies.

The investment strategist emphasized said it is important to note that the investment cycle has become a major variable in stock market investing, and that investment sectors should be looked at in relation to the investment cycle.

“When the big techs are performing well and need to invest in AI, semiconductors can be a beneficiary. Semiconductor companies are performing faster than big tech.”

“We are seeing very strong demand for factory construction in the U.S. Construction equipment companies, which are part of the industrial goods and capital goods sectors, are the beneficiaries, and their performance has been improving since the fourth quarter of last year.”

However, Kim advised investors to take a long view over the medium to long term: “The greed index is in the extreme greed zone as people are chasing short-term returns. It is not the time to invest large amounts in stocks that have risen too much.”

Looking beyond the U.S., Kim also advised keeping an eye on the Japanese stock market. The popularity of the Japanese market is attributed to the expected appreciation of the yen, which could benefit Japanese companies. Compared to U.S. companies, Japanese firms are relatively inexpensive, with a similar composition in sectors like technology and infrastructure.