Stocks with good earnings records have delivered good returns to investors this year, data showed on Monday, proving that profits are ultimately one of the primary drivers of stock prices.
According to the data compiled by the Korea Exchange, the share prices of 250 listed companies that posted on-year growth in their third-quarter net profits have risen 32 percent on average this year through Wednesday.
Over the cited period, the country’s benchmark index, the KOSPI, shed 3.27 percent, hit by a weak Japanese yen, a slump in China and the eurozone economy, and weak domestic demand.
The average return of 255 companies that reported a growth in their third-quarter operating income stood at 31.6 percent, and 317 firms that logged on-year rises in sales during the July-September period enjoyed a 25.7 percent return, the data showed.
“The relation between their profits and stock prices was found to be very close, and improved earnings usually lead to good performance in stock prices,” said an official at the KRX.
