Table of Contents
4/28 Key Themes
Today, notable themes in the domestic stock market include the reevaluation of materials related to steel, pipes, non-ferrous metals, and POSCO.
Among the rising stocks are companies related to the North-South Russia gas pipeline project, small and medium-sized steel and pipe companies. Moonbae Steel, Bukuk Steel, Daehho Special Steel, Nexteel, Husteel, POSCO Steelion, and POSCO Holdings are all rising together, forming a major pillar in the market.
On the other hand, the declining theme includes stocks related to communication equipment, 5G, optical communication, and SIM cards, which have shown noticeable weakness. These movements are expected to impact various investment strategies in the stock market.
The KOSPI index showed a solid appearance, but not all themes rose simultaneously. Today, funds moved into steel, raw materials, some secondary battery materials, and large semiconductors, while profit-taking occurred in existing high-beta tech stocks and communication infrastructure themes.
Background of Steel and Pipe Surge
Today's main theme is related to steel and pipe companies. The North-South Russia gas pipeline project increased by 12%, small and medium-sized steel companies rose by 10%, and pipe companies showed an 8% increase. Major steel stocks also recorded about an 8% increase, indicating that the supply-demand dynamics have spread across the entire steel sector beyond specific stock rebounds.
The rise in steel prices can be summarized by three main factors.
First, there are expectations that China's steel production will decrease and exports will decline. If this production cut continues, the global steel supply will stabilize, and domestic steel companies will likely strengthen their price negotiation power.
Second, as U.S.-Iran negotiations remain stalled, geopolitical risks in the Middle East are increasing. This has led to heightened concerns about energy infrastructure related to rising oil prices, increasing the demand for infrastructure materials such as pipes, fittings, and valves.
Third, funds are moving into raw materials and materials sectors following the recent rise in AI and semiconductor-focused stocks. This fund circulation is positively impacting the steel industry.
Meanwhile, the North-South Russia gas pipeline project may seem to be related solely to inter-Korean economic cooperation, but it happens that specific companies like Moonbae Steel and Bukuk Steel are leading, showing a strong tendency to rise together with the steel and pipe themes rather than simply as a North Korean-related matter.
Secondary Battery Material Rebound
Recently, notable trends have been seen in the rebound of non-ferrous metals and secondary battery materials. In particular, stocks related to lithium and nickel have risen significantly, drawing market interest toward companies such as POSCO Holdings, Aluco, and TCC Steel.
However, the current rising trend is not as clear as that of steel and appears to be more of a rebound after a decline. In fact, the themes related to lithium and secondary batteries had shown weakness over the past three days, so today's rise is positive, but to confirm sustainability, additional trading volume and related news are needed.
Particularly, POSCO Holdings emphasizes securing raw materials such as lithium and nickel along with its core steel business. In this regard, the market tends to favor stocks showing both an improvement in the steel sector outlook and a reevaluation of secondary battery materials.
Structure of Declining Themes
Today's market decline can be interpreted as a readjustment of supply and demand rather than a simple crash due to negative factors. The hardest-hit area was the communication infrastructure sector. Stocks related to communication equipment, SIM cards, optical communication, and 5G all showed declines, particularly, the drop in communication equipment and 5G-related stocks has been significant, resulting in a very low level of internal dispersion.
Materials and components related to semiconductors, as well as AI semiconductor themes, also experienced adjustments. Although power semiconductors, glass substrates, system semiconductors, on-device AI, and neuromorphic semiconductors fell, this trend seems more appropriate to be viewed as profit-taking stemming from recent strength. Large semiconductor companies maintained a relatively solid appearance, thus today's adjustment can be understood as a release of sell orders from small and medium high-beta semiconductor themes rather than a weakness in the overall semiconductor market.
Biotech, fintech, security, payment, and some consumer goods-related stocks also performed poorly. Although there were no specific negative factors affecting these themes, this lack of attention can be interpreted as the market's shift toward steel, raw materials, and large caps, leaving these stocks relatively unnoticed.
4/29 Observation Points
The most important factor to watch after April 29 is the second-day supply-demand situation of leading steel stocks. If the trading volume of Moonbae Steel, POSCO Steelion, Daehho Special Steel, and Nexteel remains stable, the steel theme may have additional opportunities for growth. However, if a gap-up black candlestick appears after a surge, it may enter a phase of overheating relief in the short term.
Next, the follow-up strength of POSCO Holdings should be considered. If the POSCO group continues to hold up steadily, there is a significant chance that a rotation among materials and raw materials may occur, impacting not only the steel sector but also lithium, nickel, waste battery, and secondary battery materials.
Finally, news regarding oil prices and the Middle East is also important. If U.S.-Iran negotiations remain stalled, oil prices may rise again, which could lead to renewed attention on themes related to refining, pipes, fittings and valves, and resource development.
As the decline continues, the rebound of semiconductor materials and power facilities is receiving more attention than communication equipment. The recent three-day increase in power facilities has been notable, so it is difficult to deem the trend as completely broken due to a single day of adjustment. However, if lagging stocks show weakness, some leading stocks like LS Eco Energy and Daehan Cable may face pressure.
Summary of Stock Themes on 4/28
On April 28, the market saw funds concentrate on steel and raw materials, while profit-taking occurred in existing high-beta technology related themes and communication equipment. The most notable sectors were major steel stocks, small and medium-sized steel companies, pipes, non-ferrous metals, and secondary battery materials.
Conversely, the areas that showed poor performance included communication equipment, 5G, optical communication, SIM cards, power semiconductors, glass substrates, and on-device AI. This should be seen less as a sign of market collapse and more as evidence of a selective bull market emerging during a transition to new leading themes.
Therefore, the key elements for tomorrow are maintaining trading volumes for leading steel stocks and observing the follow-up trends of POSCO Holdings. If these two elements remain stable, there is a high likelihood that the materials and raw materials market will continue. However, if rapidly rising stocks decline quickly, the market could revert to existing leading themes like semiconductor materials or power facilities.
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Frequently Asked Questions (FAQ)
Q. What were the most prominent themes in the stock market on April 28?
The reevaluation of materials related to steel and pipe, non-ferrous metals, and POSCO was prominent.
In the domestic stock market on April 28, steel and pipe, non-ferrous metals, and materials related to POSCO showed strength. In particular, companies related to the North-South Russia gas pipeline project and small and medium-sized steel and pipe companies led the rise, forming a major pillar in the market with Moonbae Steel, Bukuk Steel, Daehho Special Steel, Nexteel, Husteel, POSCO Steelion, and POSCO Holdings. This shows a widespread supply-demand situation across the steel sector.
Q. What is the background for the surge in steel and pipe stocks?
A decrease in Chinese steel production, geopolitical risks in the Middle East, and fund circulation promoted the price increase.
The rise in steel prices can be explained by three main factors. First, expectations regarding the decrease in Chinese steel production and exports lead to stabilization of global supply and increased negotiating power for domestic steel companies. Second, increased geopolitical risks in the Middle East due to the stalled U.S.-Iran negotiations have acted as factors for the rising oil prices and increased demand for energy infrastructure materials. Third, following the recent rise in AI- and semiconductor-centered stocks, funds have shifted into raw materials and materials sectors, positively impacting the steel industry.
Q. What are the recent trends for stocks related to secondary battery materials?
Stocks related to lithium and nickel have rebounded, but sustainability needs further confirmation.
Recently, stocks related to secondary battery materials, particularly those related to lithium and nickel, have shown signs of rebound. Companies such as POSCO Holdings, Aluco, and TCC Steel have drawn market interest; however, as there was a decline in the previous three days, this rebound is largely seen as strong after a pullback. Therefore, additional trading volume and related news will be necessary to confirm sustainability, with POSCO Holdings positively impacting market preference with its emphasis on securing raw materials such as lithium in addition to its core steel business.
Q. What are the declining themes and their causes?
Weakness in communication equipment, 5G, optical communication, and SIM cards was seen due to profit-taking.
The recent decline was primarily seen in sectors related to communication infrastructure such as communication equipment, 5G, optical communication, and SIM cards, as well as some semiconductor materials and AI semiconductor themes. This decline is largely attributed to profit-taking following recent strength, with particularly notable drops in communication equipment and 5G-related stocks. Large semiconductor companies appeared relatively solid as biotech, fintech, security, payment, and consumer goods-related stocks also performed poorly without any specific negative factors. This is interpreted as the market funds shifting towards new leading themes like steel and raw materials.
Q. What are the key points to observe after April 29?
The supply-demand situation of leading steel stocks, the follow-up trends of POSCO Holdings, and oil prices and Middle East news are important.
After April 29, attention should be paid to the trading volume and supply-demand situation of leading steel stocks such as Moonbae Steel, POSCO Steelion, Daehho Special Steel, and Nexteel. If trading remains stable, there is a high chance for additional rises in the steel theme, but if signals of adjustments emerge after significant rises, a short-term overheating relief phase may begin. Moreover, the follow-up strength of POSCO Holdings should also be monitored, and news regarding the stalled U.S.-Iran negotiations that may bring forth geopolitical risks and fluctuations in oil prices are important factors that may impact the market.
