Financial group shares spike on foreign buying
Shares of financial groups are rallying, snapping out of a weeklong downtrend brought on by the disappointing announcement of the government’s Corporate Value-up Program.
The program spearheaded by the Yoon Suk Yeol administration sought to attract and retain more foreign institutional investors, underpinned by higher shareholder returns, incentives for strong performance of undervalued stocks and the development of derivatives that track low-popularity shares.
However, most stocks ended lower last week due primarily to toothless non-binding measures lacking specifics. Financial Supervisory Service Governor Lee Bok-hyun has since pledged to implement “binding” measures.
Foreign investors remain the largest buyers of KB and Hana Financial shares, propelling their prices to over 52-week highs. KB Financial and Hana Financial ranked fourth and 10th on the list of shares foreign investors bought.
According to the Korea Exchange, KB Financial closed at 69,000 won ($51.7), Monday, up 5,500 won from the previous session.
The increase of 8.66 percent is higher than the year-to-date high of 8.3 percent seen last July 1.
Hana Financial soared 3,600 won, or 6.36 percent, to close at 60,200 won after hitting an intraday high of 60,900 won, setting a new 52-week high.
KB Financial and Hana Financial registered respective year-todate highs of 27.54 percent and 38.71 percent.
This was an outstanding performance compared to the benchmark KOSPI gaining only 0.75 percent in the same period.
A further uptrend is expected for its industry peers, as illustrated by greater shareholder return policy moves.
Hana Financial, Shinhan Financial and BNK Financial are in the process of buying back stocks for cancellation.
Kiwoom Securities researcher Kim Eun-gap said the steep rises in the financial groups’ share prices are within an expected range, as inferred from the price-to-book ratio trending over the past four years.
“The past week’s price increase may seem rather dramatic, but that is not the case upon closer reading and analysis of the data,” Kim said. “Whether the prices will stay elevated will be determined largely by the degree of specificity in the government financial policies in the coming months.”
However, the prices reversing the weeklong gains is unlikely, he added, since the Corporate Value-up Program will be strong enough of an overweight factor to lock in investor interest.
“We recommend an overweight position for holdings of financial shares with high capital ratios, as long as the government initiative remains a positive driver underpinning the robust performance of the stocks.”
KB Financial closed at 69,500 won, Tuesday, up 500 won from the previous session. Hana Financial closed at 59,700 won, down 500 won from the previous session.