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Where should people invest during the economic downturn? According to a report released by Goodmorning Shinhan Securities on Thursday, the food and beverage sector is less sensitive to the economy and thus more attractive than other sectors.
In particular, soju (Korean alcoholic), ramyun (instant noodles), and cigarettes are highlighted as the top three favorites, as they have raised their product prices in response to the economic crisis. Most food and beverage companies have pursued similar tactics this year.
This is the reason food and beverage companies have been able to post slightly higher earnings, as they did amid the 1997 Asian financial crisis and the 2003 credit card distress, when the combined sales of 35 food and beverage companies rose 9.1 percent and 18.3 percent, respectively. Cigarette sales are up 8.9 percent, ramyun 6.4 percent, and soju 3.1 percent. Such growth leads to stronger stock performance. Food and beverage stocks outperformed the general market by 20.8 percent and 14.1 percent, respectively, in the 1997 and 2003 economic crisis.
(englishnews@chosun.com )
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