April 2, 2021 Korea Equity Strategy Focus on companies resilient to rising bond yields

Mirae Asset Securities Co., Ltd. Myoung-gan Yoo [email protected] Hayeon Son [email protected]

Model portfolio strategy Focus on earnings when yields are rising ó When yields are rising, share prices tend to be driven more by earnings than valuations. As such, stocks with positive earnings momentum should fare relatively well. ó April model portfolio overweight sectors: Semiconductors, chemicals, healthcare, autos, and steel ó April model portfolio underweight sectors: Software, trading/capital goods, utilities , shipbuilding, and telecom services ó Key stocks in overweight sectors: Electronics (SEC), , , Motors, and

Global and domestic economic Markets to grow accustomed to higher rates amid economic recovery and policy support conditions ó Ongoing policy stimulus and the accelerating vaccine rollout are putting upside pressures on inflation expectations and driving bond yields higher. ó We believe investors need to position for changing interest rate dynamics. In Korea, the technology and fina ncial sectors have tended to outperform the broader market when bond yields and equities were simultaneously rising. ó Exports are continuing to drive the Korean economy. We expect domestic demand to gradually pick up on the back of increasing vaccinations and support from the W14.9tr supplementary budget.

Domestic policy updates Keep eye on April mayoral by -election and NPS Fund Management Committee ó The real estate policies of the Seoul mayoral candidates deserve close watching. Both the ruling an d opposition party candidates are calling for supply increases and reconstruction/redevelopment deregulation. ó But the two parties differ on who should lead the supply effort . The ruling party wants the public sector to take the lead, while the opposition party favors a private sector-led approach. ó In April, the National Pension Service (NPS) Fund Management Committee could potentially raise the target allocation to domestic equities. If so, NPS selling will likely ease up.

April model portfolio

(%p) 2.0

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Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. April 2, 2021 Korea Equity Strategy

April model portfolio

In March, stock markets advanced globally despite rising yields, backed by expectations for an economic recovery and corporate earnings. 12-month forward EPS estimates climbed 0.6% in DMs and 0.3% in EMs, with cyclical plays displaying solid earnings momentum.

This month, Korean companies will start releasing their 1Q results, and most sectors are anticipated to report strong earnings growth, excluding shipbuilding, hotel/leisure, consumer staples, and telecom services. The consensus estimates for combined operating profit and net profit are W41.9tr (+84% YoY) and W30.3tr (+95% YoY), respectively.

The 1Q21 operating profit consensus for Korean companies has climbed 2.1% over the past month, with energy (+22.6% MoM), steel (+13.8%), transportation (+5.8%), display (+5.5%), chemicals (+5.0%), IT appliances (+4.8%), and machinery (+4.5%) seeing particularly solid revisions.

When yields are rising, share prices tend to be driven more by earnings than valuations. As such, stocks with positive earnings momentum should fare relatively well.

For our April model portfolio, we overweight semiconductors, chemicals, healthcare, autos, and steel, and highlight SEC, Kumho Petrochemical, Samsung Biologics, Kia Motors, and Hyundai Steel as our top picks. Meanwhile, we are reducing the weights of software, trading/capital goods, utilities, shipbuilding, and telecom services.

Figure 1. April model portfolio weights vs. KOSPI

(%p) 2.0

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Source: Mirae Asset Securities Research

Table 1. Sector/stock selection factors Absolute 12MT P/E, 3Y avg. dividend yield Value Relative 12MF P/E, 12MF P/B (vs. 1Y range) Earnings FQ0 revenue growth, FQ0 OP growth Growth Forecasts 12MF OP growth Profit Chg. in consensus earnings and earnings revision ratios (1M) Momentum Net purchases by foreign/institutional investors (1M), net buying Supply/demand capacity by foreign/institutional investors (1Y) Profit stability NP volatility over the past 12 quarters Risk Share volatility Downside risks to share prices Source: Mirae Asset Securities Research

Mirae Asset Securities Research 2 April 2, 2021 Korea Equity Strategy

Figure 2. March model portfolio performance Figure 3. March model portfolio performance vs. KOSPI

(%) Energy 10.3 4.5 +1.9 +3.9 4.0 Materials 21.6 3.5 Industrials 111.9 3.0 Consumer disc. 4.8

2.5 Consumer staples 1.0 +0.1 +1.9 2.0 Healthcare 27.2 1.5 Financials 1.7 1.0 IT 9.4 0.5 Telcos 1.8 0.0 (bp) KOSPI performance Sector effect Stock selection Model portfolio Utilities -0.8 effect return -30 0 30 60 90 120

Note: Based on 3/30/21 closing prices Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Figure 4. March model portfolio: Five best/worst performers Figure 5. Model portfolio cumulative return trend

(%) Performance (1/12=100) 60 47.9 210 Model portfolio KOSPI

40 190 25.3 22.0 21.5 17.1 20 170

0 150

-7.4 -6.7 -5.3 130 -20 -10.2 -9.7

110 HMM NCsoft Hanssem Poongsan 90 HyundaiMotor LotteChemical

KB Financial Group KBFinancial 70 POSCO International POSCO Kumho Petrochemical Kumho 12 13 14 15 16 17 18 19 20 21 HyundaiMipoDockyard

Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Figure 6. April model portfolio: Z-score by sector

(Z-score) 1.0 High preference Low preference 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6

Source: Mirae Asset Securities Research

Mirae Asset Securities Research 3 April 2, 2021 Korea Equity Strategy

Figure 8. April model portfolio weights (by subsector) vs. Figure 7. April model portfolio weights (by sector) vs. KOSPI KOSPI

(%p) Energy 0.4 2.0 Materials 1.7 1.5 1.0 Industrials -1.6 0.5 Consumer disc. -0.3 0.0 Consumer staples -0.3 -0.5 Healthcare 0.7 -1.0 -1.5 Financials -0.3 Steel Retail Autos Banks Telcos

IT Energy 0.9 Utilities Display Software Securities Insurance Machinery Chemicals Healthcare IT hardware IT Shipbuilding Hotel/leisure Telcos -0.5 Construction IT appliances Transportation Semiconductors Media/education

(%p) staples Consumer

Utilities -0.7 Cosmetics/apparel Non-ferrousmetals Trading/capital goods -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Table 2. April overweight sectors and stocks to watch Stocks Notes

- Downward pressure on foundry valuation has eased. For 1Q21, we expect to see robust earnings thanks to new smartphone model launches. Semiconductors SEC - Semiconductor competitiveness will likely strengthen, as: 1) DRAM prices are likely to rise; and 2) the key driver of demand should shift to the mobile sector in 2H21. - The current market boom should continue on the back of the robust US housing market and global infrastructure investment growth. Chemicals Kumho Petrochemical - We expect to see a 1Q21 earnings surprise, backed by synthetic rubber margin improvement. Uncertainties stemming from a management control dispute have dissipated. - We expect CMO earnings to expand, supported by shortened commercialization timelines and higher utilization since the pandemic. Healthcare Samsung Biologics - With all plants operating at full capacity, a fourth plant (currently under construction) should see order momentum in 2H21.

- US margins should continue to trend upward on lower incentives and new model launches (slated for 2H21). Autos Kia Motors - Economies of scale have been achieved earlier than rivals, thanks to the launch of a model built on ’s dedicated EV platform and a differentiated business strategy (vs. Hyundai Motor).

- Improved downstream demand (builders, automakers) should lead to order expansion and price increases (via negotiations with major customers). Steel Hyundai Steel - We expect earnings to turn around in 1Q21 thanks to a favorable comparison (resulting from the elimination of one-off expenses in 4Q20) and increased flat product margins. Source: Mirae Asset Securities Research

Mirae Asset Securities Research 4 April 2, 2021 Korea Equity Strategy

April model portfolio (%, %p)

Recommended Sector weight Recommended Sector Subsector Ticker Stock sector weight Diff. MoM (index) stock weight (portfolio) (A) (B) (B-A)

Energy 2.0 2.4 0.4 Energy 010950 S-Oil 2.0 2.4 0.4 2.4 0.4 Materials 9.5 11.2 1.7 Chemicals 011170 Lotte Chemical 6.5 7.6 1.1 3.3 -1.0 Chemicals 011780 Kumho Petrochemical 6.5 7.6 1.1 2.9 0.3 Chemicals 011790 SKC 6.5 7.6 1.1 1.4 New Non-ferrous metals 103140 Poongsan 1.0 1.0 0.0 1.0 0.2 Steel 004020 Hyundai Steel 2.1 2.6 0.5 2.6 New Industrials 11.7 10.1 -1.6 Construction 009240 Hanssem 2.3 1.9 -0.4 1.9 -0.3 Machinery 112610 CS Wind 1.5 1.4 -0.1 1.4 0.1 Shipbuilding 010620 1.0 0.5 -0.5 0.5 -0.1 Trading/capital goods 034730 SK Holdings 4.1 3.3 -0.8 2.9 0.4 Trading/capital goods 047050 POSCO International 4.1 3.3 -0.8 0.4 0.0 Transportation 000120 CJ Logistics 2.7 3.0 0.3 3.0 New Consumer discretionary 13.7 13.4 -0.3 Autos 005380 Hyundai Motor 7.2 7.8 0.6 4.2 0.2 Autos 000270 Kia Motors 7.2 7.8 0.6 3.6 1.0 Cosmetics/apparel 090430 AmorePacific 3.9 3.7 -0.2 3.4 0.5 Cosmetics/apparel 007700 F&F 3.9 3.7 -0.2 0.3 New Cosmetics/apparel 192820 Cosmax 3.9 3.7 -0.2 0.0 New Hotel/leisure 008770 0.6 0.2 -0.4 0.2 New Media/education 253450 0.9 0.5 -0.4 0.5 New Retail 139480 Emart 1.1 1.2 0.1 1.2 0.5 Consumer staples 2.3 2.0 -0.3 Consumer staples 033780 KT&G 2.3 2.0 -0.3 2.0 0.0 Healthcare 7.8 8.5 0.7 Healthcare 207940 Samsung Biologics 7.8 8.5 0.7 4.5 -0.1 Healthcare 068270 7.8 8.5 0.7 3.8 0.4 Healthcare 048260 Osstem Implant 7.8 8.5 0.7 0.2 New Financials 7.7 7.4 -0.3 Banks 105560 KB Financial Group 4.2 4.2 0.0 2.7 0.2 Banks 086790 4.2 4.2 0.0 1.5 0.0 Securities 071050 Korea Investment Holdings 1.4 1.3 -0.1 1.3 -0.5 Insurance 032830 Samsung Life 2.1 1.9 -0.2 1.9 -0.3 IT 42.4 43.3 0.9 Software 035420 NAVER 7.9 6.6 -1.3 3.7 -0.1 Software 035720 7.9 6.6 -1.3 2.7 0.0 Software 067160 AfreecaTV 7.9 6.6 -1.3 0.2 New IT hardware 009150 Samsung Electro-Mechanics 1.4 1.5 0.1 1.5 0.0 Semiconductors 005930 SEC 29.0 30.5 1.5 25.4 1.9 Semiconductors 000660 SK Hynix 29.0 30.5 1.5 4.9 -1.1 Semiconductors 084370 Eugene Technology 29.0 30.5 1.5 0.2 -0.1 IT appliances 066570 LG Electronics 3.7 3.9 0.2 3.5 0.5 IT appliances 066970 L&F 3.7 3.9 0.2 0.4 0.1 Display 213420 Duksan Neolux 0.4 0.8 0.4 0.8 -0.1 Telcos 1.7 1.2 -0.5 Telcos 017670 SK Telecom 1.7 1.2 -0.5 1.2 -0.3 Utilities 1.2 0.5 -0.7 Utilities 015760 KEPCO 1.2 0.5 -0.7 0.5 0.0 Note: Based on 3/30/21 closing prices Source: Mirae Asset Securities Research

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Global and domestic economic conditions

Amid ongoing policy stimulus and the accelerating vaccine rollout, expectations of economic normalization pushed inflation expectations implied in the US bond market to 2.4%, the highest level since Apr. 2013. The 10-year UST yield also climbed back above 1.7%. As bond yields rose, global equities came under pressure, especially in the technology and clean energy sectors. However, with growth recovering and policy support continuing, we believe equities will grow more accustomed to higher yields and rise once again.

Given the likelihood of further gains in UST yields, we think investors need to position for changing interest rate dynamics. Empirically, cyclicals have tended to perform strongly when bond yields and equities were simultaneously rising. In the Korean equities market, the technology and financial sectors have typically outperformed. In terms of style, performance was not skewed towards either growth or value. While growth-oriented portfolios may need to be adjusted, we believe a more balanced approach between value and growth, rather than a complete rotation to value, would be beneficial.

Table 3. Value vs. growth performance amid simultaneous rise in bond yields/equities (%) When bond yields and equities were US equities Korean equities simultaneously rising

Start End Value Growth Value Growth 1 11/ 7/01 3/ 12 /02 5.0 3.9 65.4 55.3 2 6/ 1/05 5/ 9/06 11.9 9.6 51.6 49.0 2' 12/ 4/06 7/ 6/07 8.7 8.7 28.8 25.3 3 3/ 9/09 4/ 5/10 78.5 72.8 83.0 53.6 4 10/ 7/10 2/ 8/11 13.4 15.9 8.2 14.6 5 7/ 24 /12 1/ 1/14 37.3 39.9 14.4 12.1 6 7/ 8/16 12/ 15 /16 8.2 4.0 14.2 3.5 6' 9/ 17 /17 1/ 26 /18 12.1 17.4 7.0 9.4 7 8/ 27 /19 12/ 23 /19 12.2 12.4 15.3 19.6 8 8/ 4/20 3/ 22 /21 23.5 16.7 41.3 31.5

2+2' 6/ 1/05 7/ 6/07 31.1 24.5 88.6 78.1 6+6' 7/ 8/16 1/ 26 /18 27.4 42.4 42.0 48.0 Source : Bloomberg, Mirae Asset Securities Research

Table 4. Relative performance of Korean equities by sector when bond yields and equities were simultaneously rising (%p) Comm. Consumer Consumer Period IT Financials Industrials Material Energy Utilities Healthcare services di sc. staple 1 11/ 7/01 3/ 12/02 23.1 -46.9 4.9 37.6 0.6 1.0 12.7 -48.4 -17.9

2 6/1/05 5/9/06 -13.8 -35.5 50.8 -18.9 -6.2 40.9 -6.1 -32.9 3.8 16.6 2' 12/4/06 7/6/07 -24.4 -34.6 0.2 -11.7 -11.8 49.9 41.1 42.8 -21.9 -17.7 3 3/9/09 4/5/10 11.2 -68.2 21.2 35.2 -53.1 -21.3 19.5 -21.5 -20.2 -74.3 4 10/7/10 2/8/11 6.5 -20.2 -2.3 0.8 -21.2 0.6 -2.0 24.6 -23.9 7.0 5 7/24/12 1/1/14 12.1 33.9 10.2 -5.6 -16.8 -12.4 -15.4 -18.2 24.3 -19.7 6 7/8/16 12/15/16 9.2 -1.6 13.3 -7.8 -26.8 -3.1 7.1 3.9 -28.0 -31.8 6' 9/17/17 1/26/18 -6.5 -3.1 2.2 3.5 8.3 -0.9 5.2 -5.2 -17.6 59.1 7 8/27/19 12/23/19 7.1 -4.0 -0.7 -7.7 -4.8 -6.4 -11.6 -13.4 -8.1 3.1 8 8/4/20 3/22/21 10.0 -13.0 -6.4 24.6 -22.1 -16.3 4.6 8.2 -15.0 -40.3

2+2' 6/1/05 7/6/07 -49.6 -79.0 42.2 -50.7 -1.9 178.9 74.0 8.2 -45.0 21.8 6+6' 7/8/16 1/26/18 28.4 -22.0 11.3 -34.3 -53.3 -27.3 16.1 1.7 -80.1 37.9 Source : Bloomberg, Mirae Asset Securities Research

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Exports are continuing to drive the Korean economy. In March, exports rose 16.6% YoY, reaching the highest level since Oct. 2018. Daily average exports also gained 16.6% YoY (with 24 working days in the month, the same as the corresponding period last year), increasing for the sixth consecutive month for the first time since 2017.

By country/region, exports to the US saw six consecutive months of YoY growth through February and climbed 12.8% YoY in the first 20 days of March, helped by supply chain disruptions and stimulus effects. We expect US-bound exports to continue to benefit from supply chain disruptions and exhibit robust growth. We believe exports to China increased in March for the fifth consecutive month, but the pace of growth could slow going forward, as the Chinese economy is showing signs of cooling, and policymakers are taking a more cautious stance.

Meanwhile, with the fourth supplementary budget (W14.9tr) now finalized and another round of disaster relief funds being distributed, we expect domestic growth to gradually recover. Consumer and business sentiment are also improving. In March, Korea’s consumer sentiment index rose to 100.5p, breaking above the key threshold of 100p for the first time in 14 months. The March business survey index (BSI) also climbed to 83p, the highest level since Jul. 2011 (87p). The manufacturing BSI was 89p, with the subindex rising for both large businesses (99p) and small/medium-sized businesses (78p). The non-manufacturing BSI also improved for the third straight month, to 77p.

Figure 9. Korea’s total and daily average exports both up YoY Figure 10. Exports by destination

(%, YoY) (%, YoY) 60 30 Total exports Daily avg. exports US EU China Vietnam 50 20 40 10 30 20 0 10 -10 0 -10 -20 -20 -30 -30

-40 -40 12/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 12/20 3/21 3/20 5/20 7/20 9/20 11/20 1/21 3/21

Source: Bloomberg, Mirae Asset Securities Research Source: Bloomberg, Mirae Asset Securities Research

Figure 11. Korea’s CSI breaks above 100p Figure 12. Korea’s BSI at highest level since Jul. 2011

(P) (P) 120 Korea composite CSI 110 Korea BSI

100 110 90

100 80

70 90

60 80 50

70 40 17 18 19 20 21 10 11 12 13 14 15 16 17 18 19 20 21

Source: Bloomberg, Mirae Asset Securities Research Source: Bloomberg, Mirae Asset Securities Research

Mirae Asset Securities Research 7 April 2, 2021 Korea Equity Strategy

Domestic policy updates

1. Seoul mayoral by-election: Real estate policy in the spotlight

With the Apr. 7 Seoul mayoral by-election approaching, the real estate policies of the ruling and opposition party candidates are attracting growing attention. While both candidates stress expanding supply to stabilize housing prices, they differ on who should lead the supply effort: the private or the public sector. The ruling party candidate, Park Young-sun, has vowed to supply 300,000 public housing units in the next five years and plans to put public agencies like LH and Seoul Housing and Communities Corporation in charge of the effort. The opposition party candidate, Oh Se-hoon, aims to supply 360,000 units in the next five years, with more than 180,000 of those units coming from the private sector. To fast- track his plan, Oh has also pledged to ease redevelopment/reconstruction regulations within a week of taking office. Polls showing a slight lead for Oh (who focuses on private- sector supply) have fueled gains in large construction stocks since mid-March. With both parties promising to relax reconstruction regulations, the construction sector is likely to remain in focus.

2. NPS’s domestic equities target allocation revision

The NPS net sold W14.4tr worth of KOSPI stocks over 52 trading days from Dec. 24, 2020 to Mar. 12, 2021—its longest selling stretch on record. This net selling, combined with the increasing size of the pension fund, caused the NPS’s domestic equities allocation to fall from 21.2% at end-2020 to 21.0% at end-January.

The NPS’s 2021 target allocation to domestic equities is 16.8%, and this can be adjusted by 5%p through: 1) strategic asset allocation (±2%), which allows deviations from target allocations due to changes in asset prices; and 2) tactical asset allocation (±3%), which lets fund managers strategically move away from target allocations to generate alpha. However, if the exposure to domestic equities exceeds 18.8% due to rising share prices, the resulting deviation from the strategic asset allocation target can create potential selling pressures.

In March, the NPS Fund Management Committee proposed a revision to its domestic equities allocation limit for the first time since 2011. The committee discussed potentially raising the strategic asset allocation limit to 3.0-3.5%, but no decision was reached. It will consider the matter again at the April meeting. If the ceiling is increased, we expect the NPS’s selling to ease up.

Figure 13. YTD performance of large construction stocks Figure 14. NPS holdings by asset class

(1/1/21 = 100) Global fixed Short-term income assets 140 Hyundai E&C GS E&C Daewoo E&C 0% 6% Alternative 135 investments 11% 130 125 120 Domestic equities 115 Domestic fixed 21% 110 income 39% 105 Global equities 100 23% 95 90 1/21 2/21 3/21

Source: Quantiwise, Mirae Asset Securities Research Note: As of end-Jan. 2021 Source: NPS, Mirae Asset Securities Research

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Domestic equity market: Money flows and key events

Despite the unease over rising bond yields, the KOSPI posted gains in March on the back of optimism on the economy and retail buying. Retail investors net purchased W6.9tr in the month, but buying has been showing signs of cooling. Retail investors’ monthly cumulative trading value also fell for the second month in a row to W207tr in March (from W346tr in January).

Retail buying has been weakening mainly because investors are diversifying away from the range-bound KOSPI to other assets with higher expected returns, such as overseas equities and bitcoin. On Mar. 30, the 14 major domestic bitcoin exchanges had a combined trading volume of W17.5tr, higher than the KOSPI’s W14.2tr.

Institutional investors net sold W5.6tr in the month, of which the NPS accounted for W3.3tr. The intensity of the NPS’s selling appears to be weakening compared to the beginning of the year. The NPS’s top overweight sectors in March were cyclicals like steel and construction. Meanwhile, foreigners net sold W1.2tr worth of equities but were net buyers of financials, steel, and insurance due to the rise in interest rates.

Figure 16. Retail investors’ cumulative trading value declines Figure 15. KOSPI purchases by investor type in March

(Wbn) (Wtr) 8,000 Foreign investors 6,935 400 Domestic institutions 346 6,000 350 Domestic retail investors 4,000 300

2,000 250 207 0 200

-2,000 -1,216 150

-4,000 100

-6,000 -5,592 50 -8,000 0 3/1-5 3/8-12 3/15-19 3/22-26 3/29-31 MTD 3/20 5/20 7/20 9/20 11/20 1/21 3/21

Source: Quantiwise, Mirae Asset Securities Research Source: Quantiwise, Mirae Asset Securities Research

Table 5. Key April events Date Events Notes 4/1 OPEC+ meeting May output will be decided 4/7 Korea’s by-elections Seoul mayoral election result to determine the direction of construction stocks 4/9-4/14 AACR Among domestic companies, MedPacto, ABL Bio, and Genome & Company will participate. 4/18-21 Boao Forum (China) Asia’s version of the Davos Forum. This year, the forum will be held virtually and in person due to the pandemic. April IMF World Economic Outlook In its 2021 Article IV consultation, the IM raised Korea’s growth forecast to 3.6% Source : Mirae Asset Securities Research

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10 most-traded KOSPI stocks by investor type

Foreign investors Company Net selling (Wbn) Performance (1M, %) Company Net buying (Wbn) Performance (1M, %) SEC 589.2 -1.3 POSCO 502.7 13.7 SEC (1P) 467.7 0.3 KB Financial Group 487.3 28.3 LG Chem 377.4 -3.1 SK Telecom 340.4 11.1 Samsung SDI 300.4 -2.1 NCsoft 238.2 -6.7 SK Hynix 296.8 -6.4 210.4 13.7 LG Electronics 260.0 2.4 Samsung F&M 200.2 9.8 NAVER 252.4 0.5 Hana Financial Group 168.5 15.5 SK Biopharm 232.4 -12.7 KSOE 123.8 19.2 SK Bioscience 192.0 0.0 HMM 108.7 52.6 175.4 -3.6 AmorePacific 108.0 10.2

Domestic institutions Company Net selling (Wbn) Performance (1M, %) Company Net buying (Wbn) Performance (1M, %) SEC 1908.0 -1.3 Kia Motors 131.4 4.4 SK Hynix 670.0 -6.4 Hyundai Steel 121.3 20.3 SK Innovation 377.2 -15.9 GS E&C 121.0 18.3 Hyundai Motor 368.5 -8.0 KT 101.5 8.7 POSCO 335.6 13.7 Doosan Infracore 81.1 44.4 NAVER 302.2 0.5 AmorePacific 69.0 10.2 NCsoft 293.5 -6.7 DL E&C 62.9 8.6 HMM 293.3 52.6 KSOE 61.9 19.2 LG Chem 194.2 -3.1 Holdings 61.7 7.9 Hyundai Mobis 179.0 -3.6 Cosmax 55.2 16.8

Domestic retail Company Net selling (Wbn) Performance (1M, %) Company Net buying (Wbn) Performance (1M, %) KB Financial Group 480.5 28.3 SEC 2456.1 -1.3 SK Telecom 311.1 11.1 SK Hynix 963.0 -6.4 Shinhan Financial Group 245.6 13.7 LG Chem 579.9 -3.1 Hyundai Steel Company 190.1 20.3 SEC (1P) 549.4 0.3 Samsung F&M. 182.2 9.8 NAVER 528.9 0.5 Kia Motors 172.4 4.4 SK Innovation 500.4 -15.9 Hana Financial Group 155.1 15.5 Hyundai Motor 499.7 -8.0 POSCO 154.0 13.7 Samsung SDI 463.0 -2.1 KSOE 144.5 19.2 LG Electronics 302.0 2.4 AmorePacific 139.0 10.2 Kakao 262.3 2.1

Pension funds Company Net selling (Wbn) Performance (1M, %) Company Net buying (Wbn) Performance (1M, %) SEC 1330.2 -1.3 Hyundai Steel 70.3 20.3 SK Hynix 422.0 -6.4 AmorePacific 68.9 10.2 NAVER 256.1 0.5 Kumho Petrochemical 61.2 25.6 LG Chem 239.3 -3.1 POSCO 55.3 13.7 SK Innovation 221.7 -15.9 HiteJinro 41.9 7.6 Samsung SDI 193.1 -2.1 KSOE 40.6 19.2 NCsoft 185.6 -6.7 KT 35.8 8.7 Hyundai Motor 183.6 -8.0 SK Bioscience 35.1 0.0 Samsung Electro-Mechanics 119.7 -1.1 GS E&C 34.8 18.3 Hyundai Mobis 118.8 -3.6 Samsung Biologics 31.9 -0.3 Source : I nfomax, Mirae Asset Securities Research

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Appendix 1

Important disclosures and disclaimers Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Securities Co., Ltd. (“Mirae Asset Securities”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Securities, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Securities except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Securities, a broker-dealer registered in the Republic of Korea and a member of the . Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Securities makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Securities or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Securities by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Securities may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Securities may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Securities and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Securities. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: Mirae Asset Securities is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Securities or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Securities. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. India: This report is being distributed by Mirae Asset Capital Markets (India) Private Limited (“MACM”) in India to the customers based in India and is personal information only for those authorised recipient(s). MACM is inter alia a Securities and Exchange Board of India (“SEBI”) registered Research Analyst in India and is not registered outside India. MACM and Mirae Asset, Korea are group entities. MACM makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The user assumes the entire risk of any use made of this information. This report has been provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipient must read the entire Appendix 1 to the report carefully for Important Disclosures & Disclaimers. All other jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae

Mirae Asset Securities Research 11 April 2, 2021 Korea Equity Strategy

Asset Securities or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Securities and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Securities Research 12 April 2, 2021 Korea Equity Strategy

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Mirae Asset Securities Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. One-Asia Equity Sales Team Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

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Mirae Asset Securities Research 13