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Food, beverage shares lose early luster

All News 10:27 July 19, 2016

SEOUL, July 19 (Yonhap) -- Food and beverage shares that were bullish earlier in the year have slumped back on concerns that domestic demand will be subdued, market analysts said Tuesday.

The composite index for food and beverage industry stocks on the main bourse ended 0.27 percent down on Monday from the previous closing, marking a third consecutive day of losses. Monday's closing of 4,733.17 is 17.49 percent lower than 5,736.92 at last year's end.

The sector received attention when it started recouping early in the year from former lows, but it pivoted down to hit the lowest in 15 months on June 24. Food and beverage stocks ended the first half as the biggest losers in terms of composite index by industries.

A detailed analysis by financial tracker Fn Guide showed only 12 of the 50 companies in the sector gained in share prices compared to end-2015.

Industry leaders were the big losers. Ottogi lost 34.04 percent, unable to recover the 1 million won line for nearly four months. Orion was down 20.41 percent from the end of last year and Lotte Chilsung Beverage down 24.92 percent.

"The fundamentals are still solid, but investor sentiments have contracted," Park Ae-ran of Hyundai Securities said. Kim Tae-hyun at IBK Securities said that structure-wise, the local food and beverage market is maturing while domestic consumption is in a protracted slump. "It will be difficult to reach high growth just from demand at home," he said.

The optimistic view is that the industry will recover once second-quarter performance results are out.

"Valuations of food and beverage stocks have been amply corrected, and the index is expected to rebound after the announcement of second-quarter earnings," Shim Eun-joo at Hana Financial Investment said. "We should separate the good and the bad depending on the performance results."

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