Steel: Neutral; top picks POSCO (PKX), Hyundai Steel, Korea Zinc
We do not expect investor sentiment to improve dramatically as global demand remains in the low-growth phase and steel prices are expected to decline due to raw material price weakness. However, we believe the supply-demand balance will turn more favorable in 2020 thanks to a large decline in global crude production. We do not expect the steel sector index to underperform the KOSPI, at minimum. We prefer large-cap stocks vs. smaller ones.
Refining/Chemical: Overweight on refining, Neutral on chemical; top picks S-Oil (