Investment highlights
Our Overweight rating on the steel sector remains unchanged. We reiterate Buy on POSCO (PKX) and keep the company as our steel sector top pick. Our investment points include the rebound of China’s steel prices on strong seasonality, iron ore prices that have been stabilized at a high level amid increasing Chinese imports, and undemanding valuations with the stock trading below its historical low P/B. Furthermore, China’s September 7 interest rate cut and the expected increase in infrastructure investments should also help buoy sentiment over steel shares. We maintain our target