June 4, 2019 Korea Morning Focus

Economy & Strategy Update Major Indices Close Chg Chg (%) BOK Monitor KOSPI 2,067.85 26.11 1.28 Base rate likely to remain unchanged KOSPI 200 268.16 4.27 1.62 KOSDAQ 697.50 1.03 0.15

Turnover ('000 shares, Wbn) Volume Value KOSPI 381,005 4,640 KOSPI 200 82,234 3,395 KOSDAQ 633,990 3,582

Market Cap (Wbn) Value KOSPI 1,376,865 KOSDAQ 237,194

KOSPI Turnover (Wbn) Buy Sell Net Foreign 1,576 1,285 291 Institutional 1,383 1,482 -99 Retail 1,654 1,847 -193

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 349 375 -26 Institutional 192 203 -11 Retail 3,019 2,983 36

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 1,656 1,188 468 KOSDAQ 323 337 -15

Advances & Declines Advances Declines Unchanged KOSPI 401 417 76 KOSDAQ 566 627 93

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value 43,800 1,300 657 KODEX Leverage 11,800 395 302 Hynix 66,600 1,300 262 KODEX 200 Futures 7,800 -265 197 Inverse 2X KODEX Kosdaq150 10,195 110 151 Leverage

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Eagle Vet 8,200 1,600 207 Nova Tech 29,050 6,700 140 Kukil Paper 3,710 30 129 Cheil Bio 5,230 140 75 Woogene B&G 3,890 275 69 Note: As of June 03, 2019

This document is a summary of a report prepared by Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Mirae Asset Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

BOK Monitor Base rate likely to remain unchanged

■ May MPC meeting The MPC decided to leave the base rate unchanged at 1.75%, with one dissenting vote Fixed Income Report for a rate cut. The MPC statement confirmed the escalation of the US-China trade June 3, 2019 conflict, noted possible changes in semiconductor market conditions, and forecasted the inflation path going forward. The statement also highlighted the need to monitor domestic financial imbalances, including household debt.

Mirae Asset Daewoo Co., Ltd. ■ BOK unlikely to change the base rate, despite dissenting vote The May MPC meeting focused on three issues. Although the prospect of a protracted [Fixed Income Strategy ] US-China trade war is raising fears, the monetary authority expects GDP to improve in

Hye -young Koo 2H19 (despite the GDP contraction in 1Q19) and emphasized the need to monitor +822 -3774 -1357 financial imbalances over the long term. As such, we believe the BOK is unlikely to [email protected] change the base rate anytime soon.

Min -hyung Kim 1) Prospect of a protracted US-China trade war: A broad framework for resolving +822 -3774 -1830 [email protected] the US-China trade conflict was expected to be settled on by early May. However, the two countries’ recent spate of tariff hikes suggests that the trade war is likely to drag on for some time. Adding to the uncertainties, tensions have gone beyond tariffs to

include corporate sanctions and an export ban on rare earth minerals. With optimism

fading and risks of a protracted trade conflict rising, it is critical to closely follow developments.

2) Inflation, economic conditions, and rate movements in 2H19: Korea’s GDP contracted in 1Q19, and external conditions were weaker than expected. Looking to 2H19, we recommend monitoring economic indicators, as exports and investments are projected to decline at a slower pace. Meanwhile, Korea’s low inflation is largely related to social welfare policies and not likely to be addressed effectively by monetary policy . We look for higher inflation in 2H19 and believe deflation concerns are overblown. Thus, we believe it is premature for the BOK to consider cuts to the base rate.

3) Growing need to monitor financial imbalances over the long term: Although the pace of household debt growth has slowed, the issues affecting financial market stability are unlikely to be addressed anytime soon. Household debt levels—a key indicator of financial stability—are undeniably excessive relative to other indicators. Korea has one of the highest household debt-to-GDP ratios among OECD member countries, at close to 100%. As such, financial stability is a key factor to watch.

■ KTB yields to trade within a narrow range The BOK will increase its monitoring of global and domestic uncertainties, which have escalated since May. The BOK governor has several times stressed that external uncertainties are likely to persist, and that changes in macroeconomic conditions and financial stability need to be monitored over an extended period.

We forecast risk aversion in the bond market to remain intact until key variables stabilize. With even 10-year KTB yields having fallen 5bps below the base rate, the cost burden from negative margins cannot be ignored. However, it is also difficult to preemptively change positions until external variables stabilize and eco nomic and financial market conditions are confirmed. Accordingly, we expect KTB yields to remain within a tight range for the time being.

Mirae Asset Daewoo Research Key Universe Valuations June 4, 2019

※All data as of close May 31, 2019, unless otherwise noted.

19F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 19F 20F 19F 20F 19F 20F 19F 20F 19F 20F 005930 Samsung Electronics 261,476 43,800 3.2 -54.2 38.9 -46.7 34.7 13.6 10.1 1.2 1.1 8.8 11.1 000660 SK Hynix 48,485 66,600 2.3 -85.3 94.0 -85.4 87.6 21.4 11.4 1.0 0.9 4.8 8.5 005380 Hyundai Motor 29,593 138,500 2.9 40.1 30.5 139.2 15.0 10.8 9.4 0.5 0.5 5.1 5.7 068270 Celltrion 24,768 193,000 - - - - 0.0 0.0 051910 LG Chem 23,790 337,000 1.8 -13.1 52.7 -15.4 63.6 21.2 12.9 1.4 1.3 7.1 10.9 055550 21,410 45,150 12.5 3.1 10.5 0.7 6.1 6.1 0.6 0.5 9.4 8.8 005490 POSCO 21,056 241,500 4.6 -16.7 1.8 69.3 2.3 7.4 7.2 0.4 0.4 6.5 6.3 012330 20,682 217,000 1.6 9.1 10.2 27.0 7.4 8.8 8.2 0.6 0.6 7.5 7.6 051900 LG H&H 20,257 1,297,000 12.8 9.7 15.7 10.6 25.7 23.2 5.5 4.7 20.0 18.9 017670 SK Telecom 20,186 250,000 4.0 5.8 9.8 -34.9 53.0 9.9 6.5 0.8 0.7 8.8 12.5 035420 NAVER 18,954 115,000 0.3 -15.1 26.3 -31.4 68.6 42.6 25.2 2.7 2.5 8.2 12.5 105560 KB Financial Group 18,627 44,550 9.7 3.8 10.8 4.0 5.5 5.3 0.5 0.5 9.3 9.0 028260 Samsung C&T 17,603 92,800 2.2 5.4 20.1 -4.2 20.7 13.9 11.6 0.6 0.6 5.2 5.9 015760 KEPCO 17,108 26,650 ------0.3 0.3 - - 034730 SK Holdings 16,816 239,000 2.0 13.3 12.9 -32.3 20.1 11.1 9.2 0.9 0.8 8.9 9.8 032830 Samsung Life 16,600 83,000 - - - - 0.0 0.0 018260 Samsung SDS 16,443 212,500 1.3 11.6 16.5 12.7 15.4 23.2 20.1 2.5 2.3 11.3 12.0 000270 Motors 16,012 39,500 2.0 20.5 19.7 54.5 16.7 9.0 7.7 0.6 0.5 6.3 7.0 006400 Samsung SDI 15,472 225,000 0.4 16.8 45.7 -1.0 42.4 22.8 16.0 1.2 1.1 5.6 7.5 096770 SK Innovation 15,164 164,000 4.9 -29.5 18.8 -40.7 27.9 15.7 12.3 0.8 0.8 5.3 6.7 033780 KT&G 13,798 100,500 4.2 12.8 5.6 17.5 5.1 13.0 12.4 1.5 1.5 12.7 12.6 066570 LG Electronics 13,255 81,000 0.9 7.1 20.0 23.7 39.9 9.5 6.8 0.9 0.8 10.3 12.9 000810 Samsung F&M 13,194 278,500 - - - - 0.0 0.0 003550 LG Corp. 12,907 74,800 3.1 17.2 15.4 5.5 15.6 6.7 5.8 0.7 0.6 10.5 11.1 086790 Hana Financial Group 11,019 36,700 8.6 8.1 9.5 8.2 4.5 4.1 0.4 0.4 9.0 9.1 090430 AmorePacific 10,523 180,000 0.7 6.0 20.7 6.9 22.4 29.6 24.2 2.7 2.5 7.8 8.9 251270 10,254 120,000 44.5 59.7 57.2 39.0 34.3 24.7 2.1 2.0 6.6 8.5 035720 10,217 122,500 0.1 167.0 116.1 127.8 160.4 87.7 33.7 1.9 1.8 2.2 5.6 036570 NCsoft 10,205 465,000 1.3 32.4 26.4 49.5 17.4 16.3 13.9 3.1 2.6 23.9 23.1 010950 S-Oil 9,232 82,000 3.0 60.1 77.0 99.7 139.4 18.6 7.8 1.4 1.2 7.7 16.5 011170 Lotte Chemical 8,912 260,000 4.0 -34.3 31.9 -35.0 35.1 8.7 6.4 0.7 0.6 7.8 9.9 010130 Korea Zinc 8,520 451,500 2.4 8.9 6.0 19.1 2.4 13.6 13.2 1.3 1.2 9.7 9.3 091990 Celltrion Healthcare 8,198 57,000 - 192.4 1119.2 156.4 58.8 22.9 4.4 3.8 8.2 18.6 009540 HHI 8,174 115,500 - 594.6 - - - 68.7 0.7 0.7 - 1.0 024110 7,992 13,900 7.5 4.5 5.4 3.6 4.9 4.8 0.4 0.4 8.6 8.3 009150 Samsung Electro-Mechanics 7,238 96,900 1.1 -19.1 28.9 -17.5 31.2 13.9 10.6 1.4 1.2 10.7 12.6 030200 KT 7,207 27,600 4.0 2.0 3.0 28.2 5.6 8.2 7.7 0.5 0.5 6.5 6.6 018880 Hanon Systems 6,219 11,650 - - - - 0.0 0.0 032640 LG Uplus 6,113 14,000 4.6 -2.9 11.7 2.0 18.2 12.4 10.5 0.9 0.8 7.0 7.9 086280 6,075 162,000 2.0 8.8 2.2 20.2 8.7 11.6 10.6 1.3 1.2 11.8 11.7 034220 LG Display 6,047 16,900 - - - - - 19.0 0.4 0.4 - 2.3 000720 Hyundai E&C 5,735 51,500 1.0 24.6 6.1 20.7 0.6 12.5 12.4 0.9 0.8 7.2 6.8 004020 5,491 41,150 1.8 2.5 16.1 42.1 23.3 9.7 7.9 0.3 0.3 3.3 3.8 267250 5,163 317,000 5.8 78.7 2.1 154.0 4.5 7.6 7.2 0.6 0.6 8.6 8.5 Holdings 010140 SamsungHvyInd 4,914 7,800 - - - - - 63.6 0.6 0.6 - 1.2 128940 4,755 409,500 0.1 37.5 -0.2 141.7 -12.3 79.0 90.1 6.1 5.8 8.2 6.8 023530 Lotte Shopping 4,512 159,500 3.3 6.5 3.9 - 10.5 11.2 10.2 0.4 0.4 3.4 3.7 005830 DB Insurance 4,482 63,300 - - - - 0.0 0.0 029780 Samsung Card 4,293 37,050 -16.3 3.1 2.8 4.1 12.1 11.6 0.6 0.6 1.5 1.5 097950 CJ CheilJedang 4,215 280,000 1.3 15.4 12.7 -64.8 23.7 14.7 11.9 0.9 0.8 6.3 7.3 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research Market Data June 4, 2019

※All data as of close June 03, 2019, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 408.51 -0.22 -0.05 -4.76 USD/KRW 1,191.20 1,190.00 1,163.90 1,076.40 KOSPI 2,067.85 26.11 1.28 2.88 JPY100/KRW 1,100.36 1,085.82 1,043.72 989.61 KOSDAQ 697.50 1.03 0.15 4.20 EUR/KRW 1,330.87 1,324.83 1,300.66 1,259.28 Dow Jones* 24,815.04 -354.84 -1.41 6.38 3Y Treasury 1.58 1.59 1.74 2.19 S&P 500* 2,752.06 -36.80 -1.32 9.64 3Y Corporate 2.07 2.08 2.20 2.81 NASDAQ* 7,453.15 -114.57 -1.51 11.81 DDR2 1Gb* 1.05 1.05 1.06 1.35 Philadelphia Semicon* 1,296.19 -19.10 -1.45 11.23 NAND MLC 64G* 2.37 2.36 2.55 3.64 FTSE 100* 7,161.71 -56.45 -0.78 6.35 Oil (Dubai)* 63.83 67.12 71.63 75.45 Nikkei 225 20,410.88 -190.31 -0.92 4.34 Gold* 1,305.80 1,287.10 1,284.20 1,300.10 Hang Seng* 26,901.09 -213.79 -0.79 7.05 Customer deposits (Wbn)* 24,256 26,291 25,807 28,817 Taiwan (Weighted) 10,500.07 1.58 0.02 9.90 Equity type BC (Wbn)(May. 30) 80,661 80,377 82,928 80,363 Note: * as of May 31, 2019 Source: KSDA, FnGuide, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Samsung Electronics 141.56 KEPCO 13.46 KODEX Leverage 54.50 Samsung Electronics 49.54 LG Electronics 20.61 11.08 Samsung SDI 19.72 KODEX 200 Futures Inverse 2X 41.02 Hyundai Motor 19.11 Hynix 9.85 LG Electronics 17.59 KODEX Inverse 21.92 POSCO 12.95 LG Display 9.70 KEPCO 14.83 SK Energy 10.53 NAVER 10.11 KODEX 200 Futures Inverse 2X 7.17 Hynix 10.11 S-Oil 8.54 Shinhan Financial Group 8.55 Korea 4.54 Netmarble 7.21 Samsung Engineering 7.67 SK C&C 7.87 TIGER200 3.58 OCI 6.61 Hana Financial Group 7.56 SEMCO 7.38 KBSTAR 200 3.22 TIGER200 5.54 KB Financial Group 7.36 Hana Financial Group 7.38 Netmarble 3.19 Woori Investment Securities 5.40 POSCO 7.05 KB Financial Group 7.29 TIGER 200 Futures Inverse 2X 3.09 Hanwha Chemical 5.38 Shinhan Financial Group 6.50 Source: KSDA, FnGuide

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Wi-Sol 4.63 10.85 Medy-tox 7.02 Studio Dragon 6.94 SillaJen 4.58 Solid Technologies 4.86 Nepes 5.61 ViroMed 5.46 ABL Bio 3.65 Emerson Pacific 3.76 Humax 2.15 Mezzion Pharma 5.17 MC Nex 3.25 Keayeast 3.54 Wi-Sol 1.92 CJ ENM 4.43 InBody 2.98 Easy Bio System 3.22 MC Nex 1.73 KMW 4.22 PearlAbyss 2.83 Celltrion Healthcare 3.09 SM 1.70 KB No.10 Spac 3.38 ViroMed 2.65 LB Semicon 2.29 KG Inicis 1.68 Silicon Works 2.71 OE Solutions 2.36 Kangstem Biotech 1.89 HLB 1.33 Paradise 2.67 CJ ENM 2.30 Woorison F&G 1.86 SFA Engineering 1.31 Kangstem Biotech 2.55 Dasan Networks 2.11 UTI 1.69 Digital Aria 1.30 Incross 2.50 Source: KSDA, FnGuide

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 43,800 1,300 261,476 Celltrion Healthcare 57,000 100 8,198 Hynix 66,600 1,300 48,485 CJ ENM 187,500 -4,100 4,112 Hyundai Motor 138,500 4,000 29,593 SillaJen 55,600 600 3,919 Samsung Electronics (P) 35,900 1,100 29,542 ViroMed 190,200 -4,600 3,035 Celltrion 193,000 3,000 24,768 HLB 72,700 2,500 2,852 LG Chem 337,000 4,000 23,790 Medy-tox 483,300 35,100 2,810 Shinhan Financial Group 45,150 700 21,410 PearlAbyss 198,900 1,200 2,590 POSCO 241,500 4,000 21,056 Studio Dragon 66,900 -6,900 1,877 Hyundai Mobis 217,000 0 20,682 Celltrion 51,500 400 1,755 LG Household & Health Care 1,297,000 19,000 20,257 Hugel 396,500 -3,200 1,728 Source: