近期，由于市场对韩国政府推出的“企业价值提升计划”的未来表示担忧，J.P. Morgan believes that the short-term correction in South Korea's financial stocks is a re-entry point. Today, KB Finance fell by more than 10%, but J.P. Morgan maintained an increase in holdings ratings for several financial groups, including KB Finance, considering valuation value advantages and shareholder returns.
After a night of chaos in Korea, investors were “worried” and financial stocks “continued to fall,” but J.P. Morgan believes “this is an opportunity.”
Recently, analysts at J.P. Morgan Chase said that the recent correction in Korean financial stocks due to political turmoil has provided investors with a buying opportunity because they expect the Bank of Korea to continue its efforts to increase shareholder returns.
Recently, bank stocks “bore the brunt” of the market sell-off due to market concerns about the future of the “Corporate Value Enhancement Plan” introduced by the South Korean government. This move was part of the current administration's key policy to deal with the long-term decline in stock market valuations. Speculators viewed financial stocks as representative of betting on increasing returns.
In the past two trading days, the Bank of Korea stock index fell by more than 9%. Among them, the stock price of KB Financial Group, the parent company of Korea's largest bank, plummeted by more than 10% today, and the stock prices of Shinhan Financial Group and Korea Asia Financial Group also fell by more than 4%.
However, J.P. Morgan analyst Jihyun Cho believes that although the legislative process required for more effective corporate value enhancement plans may have lost momentum, the efforts made by individual companies may be hopeful that they will continue to achieve operational and shareholder return goals. They stated:
“We think the short-term pullback is a re-entry point.”
Therefore, considering the valuation value advantages and shareholder returns of these financial groups, J.P. Morgan Chase maintained an increase in holdings ratings for Korea Asia Finance, KB Finance, and Shinhan Finance.
Since this year, Bank of Korea shares have been favored by the market due to their relatively low net market ratio, and the market generally expects the industry to be the main beneficiary of government reforms. It is worth noting that prior to the martial law declared by the President of South Korea, the Bank of Korea stock sub-index hit a six-year high on December 3. Analysts at J.P. Morgan Chase emphasized:
“We will not focus solely on the political situation, but more on banks' profitability and sufficient capital buffers, especially in large banking groups, to support dividend increases.”
