Shows better ups and downs than KOSPI of the three mobile carriers
No significant impact on performance due to economic fluctuations
The domestic stock market is collapsing helplessly on fears of a recession. The KOSPI index plummeted to such an extent that the 2400 line collapsed during the morning of the 17th. Investor sentiment sharply froze as the US central bank, the Federal Reserve (Fed), recently took a ‘giant step’ to raise the key interest rate by 0.75 percentage points at a time. The stock prices of most stocks, including Samsung Electronics, the leader in the domestic stock market, which fell below 60,000 won, are showing a downward trend.
The stock price of the defensive stock does not fluctuate much even in this kind of crash. A typical example is telecommunication companies. This is because sales and operating profit can be generated consistently regardless of economic fluctuations. In fact, the stock prices of the three major telecommunication companies, which represent telecom stocks, showed a better level than the decline, but there were mixed results by company.
Among the three mobile carriers, KT performed the most. The stock has risen 18.79% so far this year. KT, which started this year at 36,600 won, finished trading at 36,350 won on June 17. Large-cap stocks have recorded double-digit gains this year, amid a hopeless decline. This is thanks to the market’s positive evaluation of KT’s business expansion efforts and its active shareholder return expansion policy. During the same period, LG U+ recorded an increase of 0.74%, making a good lead in the downtrend.
On the other hand, SK Telecom showed a clear decline. It opened this year at 57,900 won, and closed at 51,900 won on June 17, down 10.36%.
The company’s stock has been bearish since the end of April as the possibility of being excluded from the Morgan Stanley Capital International (MSCI) index change emerged. MSCI considers the potential for foreign investors to acquire additional shares when adding or adding to the index, as SK Telecom’s foreign ownership has reached its limit. As a result, it remained, but the supply-demand burden was reflected in the share price. The stock price fluctuated as the introduction of the intermediate rate system began in earnest.
Nevertheless, it is at a good level compared to the KOSPI yield (-18.26%). Unlike other large-cap stocks, where foreign investors continued to sell out this year, telecom stocks were able to stand firm by recording net purchases by foreign investors.
Although the possibility of further corrections in the domestic stock market is predicted, the outlook for telecom stocks is bright. In the stock market, most sectors are downgrading their earnings forecasts for this year, but the telecom sector is not. According to FnGuide, a financial information company, the securities industry predicted that SK Telecom’s operating profit in the second quarter of this year would increase by 11.6% compared to the same period last year.
KT is expected to report an operating profit improvement of 9.2% and LG U+ by 4.6%. Although the growth of 5G subscribers, which is the key to profits, is often slowing down, the intensity of marketing competition within the industry has decreased and the sales volume of non-telecom businesses is growing. In addition, as the high dividend payout ratio of telecom stocks adds to the attractiveness of investment, we believe the stock has further upside potential.
Reporter Darin Kim firstname.lastname@example.org