Green, Digital New Deal initiatives expected to lead stock market

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By Anna J. Park

Retail investors are eyeing stock items that could benefit from the government's long-term roadmap, following the government's recently announced plan to spend 160 trillion won ($130 billion) under the banner of the Korean New Deal ― a set of measures aiming to boost the post-coronavirus economy by focusing on information technology and low-carbon initiatives.

While the Korean New Deal plan is short on specifics, it still could be quite meaningful for a number of industries and their investors.

There's not a lot of specifics on particular technologies or how to pay for the proposed changes. However, long-term investors nonetheless may want to pay attention to the Korean New Deal, as the plan is intended to expand the country's presence in artificial intelligence (AI), big data, smart healthcare infrastructure, renewable energy and eco-friendly mobility.

Stocks related to Digital New Deal

Specifically in the digital sector, companies like Samsung Electronics, Samsung SDS, Lotte Data Communication, Hancom MDS, KMW, Innowireless and HFR would attract investors' attention with their strengths in various technologies including wireless IT communications, data and smart grids.

The policy of expanding digital infrastructure would also continue to work favorably to representative platform IT companies like Naver, Kakao, NCSOFT, Douzone Bizon, RSUPPORT, KG Mobilians and KINX.

“With regards to the Digital New Deal front, companies owning technologies that enable digital transformation, contactless lifestyles and smart healthcare are particularly expected to benefit from the policy direction,” said Lee Sang-heon, analyst at HI Investment & Securities.

Stocks related to Green New Deal

Companies like Doosan Fuel Cell, Hyundai Energy Solutions, G-ENONE Energy, Hanwha Solution and Kolon Materials all enjoyed stock price surges during Wednesday's stock market, as they're linked to the government's policy goal for innovating renewable energy and fostering sustainable growth.

Hyundai Motor Group affiliates, like Hyundai Mobis and Hyundai Motor Company, are also expected to benefit from the green energy policy, as the carmaker's Executive Vice Chairman Chung Euisun vowed recently to push hard to be a top global seller in the electric vehicle (EV) market in the next five years.

“In the case of Green New Deal areas, stocks related to renewable energy would further receive investors' picks, as the government's policy direction coincides with Europe's recent green hydrogen strategy announcement and recent bullish moves of solar and hydrogen energy stocks in the U.S. market,” Noh Dong-gil, an analyst at NH Investment & Securities, pointed out.

Key industries to lead future market as growth engine

Market watchers pointed out that some of the stock prices have already reflected the public's expectations about the government's heralded policy directions, as the general framework of the various New Deal packages was already disclosed at the end of last month.

Yet they also called for retail investors to take a long-term perspective, rather than seeking out short-term profits, when deciding to invest in these digital or green-themed stocks. They noted those policy directions towards a greener and more digitized economy are shared by other major countries, including those of the EU, and these industries are expected to generate exponential growth over the coming decades.

“I think investing in these sectors is no longer a choice but a necessity. They are highly likely to lead the future stock market as key industries, as they will be the main growth engine of the near future,” stressed Choi Jae-won, an analyst at Kiwoom Securities.