By Yoon Ja-young
Staff Reporter

Despite the gloomy outlook on the economy next year, some industries are expected to fare better than others, particularly telecommunications, food and beverages (F&B), and tire businesses, according to analysts in Seoul.

The keyword for stock investment next year is ``defensive stocks,'' or stocks that tend to perform stably under difficult economic conditions. Typically, telecommunications, F&B, pharmaceuticals and cosmetic stocks are regarded as such.

Telecommunications stocks are the top pick for 2009 investors. Analysts estimate operating income to grow over 10 percent, and net profit by over 20 percent next year as fierce competition in the market subsides.

``Telecommunications stocks are the most typical defensive ones. Their performance next year is unlikely to be affected by the economic recession,'' said Sung Jong-hwa, an analyst at Meritz Securities. Sung said the growth determinant for the industry next year is not the economy but government regulation.

``Telecommunication stocks have become a daily necessity giving stable profit. However, excessive marketing competition ate into profits,'' said Won Jong-hyuk, a portfolio analyst at SK Securities. Marketing costs, however, are expected to decrease as consumers are increasingly long-term committed and as firms are taking conservative strategies, according to Won.

F&B was another top pick by analysts for next year. ``The industry is likely to maintain growth as global crop prices are falling,'' Won said. He added that the falling crop prices are offsetting the negative effects of the weakening of the Korean won.

``Households consumption, which is sensitive to income, is expected to decrease as gross domestic product is expected to grow only 1.6 percent in 2009. Investors should buy F&B stocks, which are basic necessities barely affected by cuts in spending,'' said Danny Song, an analyst at Meritz Securities.

The tire industry was also recommended by a number of analysts. ``Raw materials, including raw rubber and oil products, took around 40 percent of sales in the tire industry, and raw material prices are estimated to keep plunging next year,'' Samsung Securities said. Analysts expect falling raw material prices to help the tire businesses improve profitability, though demand is likely to decrease in 2009.

They also recommend firms with high market shares that enjoy monopoly status. Financially stable companies are always preferable in the Seoul bourse and global stock market. ``We believe the best value in this very uncertain period can be found in higher-quality companies that have relatively strong balance sheets, adequate financing, strong levels of free cash flow and good management with the ability to control cash flow under a slowing economic environment,'' said Richard Urwin, head of asset allocation and economics at BlackRock Investment Management.

chizpizza@koreatimes.co.kr