Financial stocks blighted by economic downturn

Settings

ⓕ font-size

  • -2
  • -1
  • 0
  • +1
  • +2

Financial stocks blighted by economic downturn


By Jhoo Dong-chan

Share prices of the nation's four financial groups are continuing their downward spiral despite the groups' strong earnings.

According to the Korea Exchange (KRX), the average share price of Korea's four financial groups fell over 10 percent in the past month.

Woori Financial Group closed at 11,750 won ($9.61) on Tuesday, down 15 percent from its July 12 figure of 13,850 won.

Woori Financial Group Chairman Sohn Tae-seung bought 5,000 shares on July 26 in a bid to boost the group's share price, but failed to prevent the slide.

KB Financial Group's share price is down about 13 percent over the past month, hitting 38,250 won at Tuesday's session close.

Hana Financial Group has suffered a 10 percent drop to 31,850 won as of Tuesday.

Shinhan Financial Group is the only domestic financial group to maintain a share price at the 40,000 won level, but it has dipped nearly 8 percent over the past month, finishing at 40,400 won on Tuesday.

"Share prices of financial groups have displayed a nosedive whenever the economy faces a national bankruptcy-level crisis," said Shinhan Investment researcher Kim Soo-hyun.

"Their share prices hit all-time lows since the 2007-08 global financial crisis."

Like Sohn, financial firm heads are rushing to buy back shares to prevent stock prices from declining further. The move also aims to demonstrate their confidence in their firms' future stock prices.

According to Hana Financial Group, Chairman Kim Jung-tai bought back 3,400 shares on June 20 and another 2,000 on July 9.

Shinhan Financial Group said Chairman Cho Yong-byung plans to visit London to meet major institutional investors there, including BlackRock, to attract its investment.

BlackRock is the world's largest asset manager, with $6.84 trillion in assets under management as of June 2019. It also owns a 6.13 percent stake in the financial group as of the end of last month.

KB Financial Group Chairman Yoon Jong-kyoo is expected to visit the U.S. and Canada to convene an investor relations (IR) conference to attract investors there.

"Their disappointing share prices reflect mounting global uncertainties, accompanied with the Bank of Korea's key rate downtrend," said Daishin Securities researcher Lee Kyung-min.

"It's hard to say they have reached rock bottom at this point. Investors should take a wait-and-see approach."

Despite disappointing stock prices, market analysts still remain positive on financial groups' future prices.

"The renewed U.S.-China trade tension, global downtrend in interest rates and weak Korean won value have led to foreign investors going on a selling spree," said Hana Financial Investment researcher Choi Jeong-wook.

"Foreign investors dumped 211 billion won worth of financial group shares during the first week of the month. Investor confidence won't recover soon at this point, but their share prices are definitely undervalued due to the foreigners' selling spree over the past month. This could be the ideal time to purchase them at low prices."



By Jhoo Dong-chan

Share prices of the nation's four financial groups are continuing their downward spiral despite the groups' strong earnings.

According to the Korea Exchange (KRX), the average share price of Korea's four financial groups fell over 10 percent in the past month.

Woori Financial Group closed at 11,750 won ($9.61) on Tuesday, down 15 percent from its July 12 figure of 13,850 won.

Woori Financial Group Chairman Sohn Tae-seung bought 5,000 shares on July 26 in a bid to boost the group's share price, but failed to prevent the slide.

KB Financial Group's share price is down about 13 percent over the past month, hitting 38,250 won at Tuesday's session close.

Hana Financial Group has suffered a 10 percent drop to 31,850 won as of Tuesday.

Shinhan Financial Group is the only domestic financial group to maintain a share price at the 40,000 won level, but it has dipped nearly 8 percent over the past month, finishing at 40,400 won on Tuesday.

"Share prices of financial groups have displayed a nosedive whenever the economy faces a national bankruptcy-level crisis," said Shinhan Investment researcher Kim Soo-hyun.

"Their share prices hit all-time lows since the 2007-08 global financial crisis."

Like Sohn, financial firm heads are rushing to buy back shares to prevent stock prices from declining further. The move also aims to demonstrate their confidence in their firms' future stock prices.

According to Hana Financial Group, Chairman Kim Jung-tai bought back 3,400 shares on June 20 and another 2,000 on July 9.

Shinhan Financial Group said Chairman Cho Yong-byung plans to visit London to meet major institutional investors there, including BlackRock, to attract its investment.

BlackRock is the world's largest asset manager, with $6.84 trillion in assets under management as of June 2019. It also owns a 6.13 percent stake in the financial group as of the end of last month.

KB Financial Group Chairman Yoon Jong-kyoo is expected to visit the U.S. and Canada to convene an investor relations (IR) conference to attract investors there.

"Their disappointing share prices reflect mounting global uncertainties, accompanied with the Bank of Korea's key rate downtrend," said Daishin Securities researcher Lee Kyung-min.

"It's hard to say they have reached rock bottom at this point. Investors should take a wait-and-see approach."

Despite disappointing stock prices, market analysts still remain positive on financial groups' future prices.

"The renewed U.S.-China trade tension, global downtrend in interest rates and weak Korean won value have led to foreign investors going on a selling spree," said Hana Financial Investment researcher Choi Jeong-wook.

"Foreign investors dumped 211 billion won worth of financial group shares during the first week of the month. Investor confidence won't recover soon at this point, but their share prices are definitely undervalued due to the foreigners' selling spree over the past month. This could be the ideal time to purchase them at low prices."


Jhoo Dong-chan jhoo@koreatimes.co.kr


LETTER

Sign up for eNewsletter