In today’s briefing:
- Time to Turn Defensive
- Fade the Value Rebound
- Long-Short Trade of KOSPI200 & KOSDAQ150 Amid Osstem Implant Employee Embezzlement Disaster
Time to Turn Defensive
- We wrote a week ago that investment-oriented accounts should turn cautious on the stock market, but traders shouldn’t be ready to turn bearish just yet.
- The sell signal has arrived and the tone of the stock market is turning decidedly bearish.
- Technical internals are deteriorating and our base-case scenario calls for a 5–10% pullback. A downdraft of 20% represents an outlier case but would need a major catalyst.
Fade the Value Rebound
- The economy is transitioning to a mid-cycle phase of its expansion. Economic and earnings growth momentum are fading after the initial V-shaped recovery in stock prices.
- Similar episodes in 1994, 2004 and 2010 resolved themselves with sideways and choppy stock markets.
- Investors should not expect superior performance from value and cyclical sectors. Instead, focus on stocks with quality growth characteristics and defensive names.
Long-Short Trade of KOSPI200 & KOSDAQ150 Amid Osstem Implant Employee Embezzlement Disaster
- There is an interesting long-short trade that is setting up nicely amidst the Osstem Implant (048260 KS) employee embezzlement disaster.
- Osstem Implant is currently included in the KOSDAQ150. Going forward, there is a strong possibility that Osstem Implant is excluded in KOSDAQ150 index.
- Osstem Implant is currently involved in an employee embezzlement case worth 221 billion won. This employee stole the company’s money and traded more than $1 billion in stocks.
Before it’s here, it’s on Smartkarma
