[Edaily Reporter Kim Kyung-eun ] With stock market trading volume having fallen by more than half over the past three months, analysts suggest that a strategy focused on identifying stocks with defensive characteristics—such as undervaluation, high dividends, and strong cash flow—is more advantageous than simply picking individual stocks. In particular, auto stocks such as HyundaiMotor(005380), HyundaiMobis(012330), and KIA CORPORATION(000270) are considered to be relatively well-positioned in the current market environment.

Lee Kyung-soo, an analyst at Hana Securities, stated in a report on the 16th, “Since the market is not favoring specific stocks, strategies based on stock selection cannot work, and with nothing to choose from, the focus shifts to the quality of defensive strategies and high-dividend structures.” This implies that, in a situation where funds are not consistently flowing into specific stocks, investor interest is shifting toward stocks with excellent cash flow, undervalued stocks, and those offering attractive dividends.

According to Hana Securities, factors such as top free cash flow (FCF), low price-to-book ratio (PBR), top cash flow, and high dividends have recorded relatively strong performance this month. In contrast, factors based on active stock selection—such as companies with high capital expenditures (CAPEX), those with upwardly revised target prices, and stocks with the highest net institutional buying—have shown a distinct weakness.

Behind this trend lies a significant decline in stock market trading volume. Average daily trading volume on the KOSPI has fallen by more than 50 percent, from 5 trillion won in June to the current 2.2 trillion won. Analysts attribute the decline in market vitality to continued preference for safe-haven assets amid increased interest rate volatility, compounded by selling from retail investors seeking to recoup their principal by capitalizing on a stock price rebound.

While short-term rotational trading is occurring, primarily in some heavily sold-off stocks, there is no clear trend of steady buying interest flowing into specific stocks. Rather, it is explained that rotational trading—where investors buy stocks that have recently fallen sharply for the short term—is repeating itself.

Consequently, investment strategies that perform relatively well when trading volume declines are expected to be advantageous through the end of the year. These include high-dividend stocks; stocks with a significant gap between their target price and current price; stocks with upwardly revised dividend forecasts; stocks with low P/E ratios; stocks with no institutional or foreign investor demand; stocks with high net cash or cash flow; and heavily oversold stocks and those with low P/B ratios.

When these criteria were evaluated comprehensively, the automotive sector received the highest score. HyundaiMotor, HyundaiMobis, and KIA CORPORATION ranked among the top performers in the “quality” stock group.

The analyst stated, “The automotive sector not only offers high dividend yields of 3–6% but has also fallen significantly, widening the gap between target prices and current stock prices.” He added, “Above all, the trend of institutional investors pulling out is pronounced, and the appeal of undervaluation is highlighted, leading us to judge it as the highest-quality Daesang in the current market environment.”

According to the report, HyundaiMotor’s 12-month forward P/E ratio is 8.8x, and its P/B ratio is 0.8x. Its stock price return over the past three months was recorded at -40.6%. HyundaiMobis, with a P/E ratio of 7.8x and a P/B ratio of 0.7x, has fallen 37.5% over the past three months, while KIA CORPORATION, with ratios of 5.2x and 0.8x, respectively, has declined 26.8% over the same period.

Kakao(035720) NAVER(035420)were also highlighted as stocks to watch. These two stocks show a significant gap between their target prices and current prices, and factors such as undervaluation, a lack of institutional buying, oversold conditions, dividend increases, net cash, and free cash flow (FCF) were all highlighted simultaneously. and were also included in the top group of stocks based on high dividends, undervaluation, and net cash. Samsung Life Insurance(032830) POSCO Holdings Inc.(005490)