20170529-三星证券-Keeping_beta_at_a_high_1.12_36页_1mb

Samsung Model Portfolio Summary

Core Content

The Samsung Model Portfolio is a strategic investment approach designed to outperform the Kospi index during the bull market in June 2017. The portfolio maintains a beta of 1.12, which is consistent with the previous month. The performance of the portfolio from April 25 to May 26 showed a gain of 7.29%, outperforming the Kospi by 7.9 basis points.

Main Points

• Market Overview:

  • Global market volatility eased in early May due to the expected outcome of the French election.
  • Political uncertainties resurfaced mid-month due to calls for the impeachment of US President Trump.
  • The Kospi continued its rally, driven by the new Korean president's policies and expectations of economic stimulus.

• June Outlook:

  • The Kospi is expected to continue its bull run due to:
    1. Corporate earnings improvements (average EPS growth of 13.7% since end-2016).
    2. Policy anticipation for the new administration, including fiscal expansion and corporate governance reforms.
    3. Attractive valuations (MSCI Korea is undervalued by 24% and 44% relative to MSCI EM and DM indices).
  • The US Fed is anticipated to raise interest rates again, despite political uncertainties, and possibly reduce its balance sheet.
  • The portfolio strategy is to track the benchmark index, while increasing exposure to traditional cyclicals such as industrial goods and materials for alpha returns.

Key Portfolio Changes

• Increased Exposure:

  • Financials: from 13% to 15%
  • IT: from 32% to 34%
  • Materials: from 10% to 11%

• Decreased Exposure:

  • Healthcare: from 3% to 0%
  • Consumer discretionary: from 16% to 15%
  • Consumer staples: from 5% to 4%

• Added Companies:

  • LG Household & Health Care
  • Lotte Himart
  • Samsung Electro-Mechanics
  • Jusung Engineering

• Removed Companies:

  • CJ O Shopping
  • Cosmax
  • Yuhan
  • Doosan Bobcat
  • Coway
  • Lotte Chilsung
  • NCsoft
  • Hyundai Robotics

Portfolio Weightings by Sector

Portfolio Performance vs Kospi

Summary of Strategy

• The portfolio maintains a high beta to capitalize on the continued bull market.
• High-beta stocks are emphasized to generate alpha returns.
• IT and financials exposure is kept consistent, while traditional cyclicals are gradually increased.
• The Kospi target range for June is set at 2,250–2,400.

Conclusion

The Samsung Model Portfolio is strategically positioned to capitalize on the expected continued bull run of the Kospi in June 2017, with a focus on high-beta stocks and traditional cyclicals. The portfolio maintains a beta of 1.12, with increased exposure to financials, IT, and materials, while reducing exposure to healthcare and consumer staples. The portfolio is expected to benefit from economic expansion, policy changes, and valuation improvements.