Capital Group, one of the four largest asset management companies in the U.S., has reportedly made a significant purchase of domestic bank stocks right after the declaration of martial law last year. After the declaration of martial law caused bank stock prices to drop, the company made large-scale net purchases. Additionally, foreign investors, who have shown a 'sell' trend throughout December this year, are also buying bank stocks again, raising expectations for a price rebound.
Capital Group announced on the 10th that it has increased its stake in KB Financial, Hana Financial Group, and JB Financial Group. The ownership percentage for KB Financial rose from 7.24% to 8.06%, for Hana Financial Group from 5.83% to 6.95%, and for JB Financial Group from 5.70% to 6.79%.
With this investment, Capital Group has become the second-largest shareholder of Hana Financial Group and the fourth-largest shareholder of JB Financial Group. In the case of KB Financial, it maintained its position as the second-largest shareholder while significantly narrowing the equity gap with the largest shareholder, the National Pension Service (8.21%), by 0.15 percentage points.
Specifically, Capital Group made massive stock purchases immediately after the martial law situation on December 3rd last year. From December 4th to 6th, it net purchased 2,628,778 shares of KB Financial, which accounted for 82% of all KB Financial net purchases (3,223,965 shares) during December. During the same period, Hana Financial Group also bought 1,667,485 shares, making up 52% of its total net purchases (3,199,318 shares).
Capital Group acquired JB Financial Group stocks over a seven-month period starting in June, with the shares purchased in December (224,551 shares) accounting for approximately 11% of total net purchases (2,136,054 shares). This is interpreted as an effort to buy low after bank stocks plummeted following the martial law situation.
Bank stocks rose last year as the government implemented a program to enhance corporate value in the domestic stock market. However, following the martial law situation, uncertainty regarding the government's value-up program increased, and bank stocks, which were the leading stocks in the program, suffered.
In December, the stock prices of the four major financial groups—KB (-13.83%), Shinhan (-10.09%), Hana (-8.97%), and Woori Financial Group (-8.02%)—significantly decreased. Additionally, the won to dollar exchange rate skyrocketed, becoming a negative factor for bank stocks. The rise in the won-dollar exchange rate increases foreign exchange losses and the growth rate of risk-weighted assets, negatively affecting bank finances.
However, as bank stock prices have dramatically declined, some investors are looking to utilize this as a buying opportunity. This year, foreign investors are also paying attention to bank stocks. According to Hana Securities, foreign investors net purchased 32 billion won worth of bank stocks last week (from January 6th to 10th), marking the first weekly net purchase of bank stocks since the martial law situation. During the same period, domestic institutions also net purchased bank stocks worth 30 billion won in the securities market.
Within the securities industry, expectations are that bank stock prices will show a strong upward trend compared to the KOSPI index this year. Foreign investors are focusing on bank stocks, and analyses suggest that concerns arising from the martial law situation have already been reflected in stock prices. Additionally, the slowing pace of global interest rate reductions is likely to be a positive factor for bank stocks.
From the 2nd to the 10th of this month, bank stock prices for KB (5.91%), Shinhan (4.62%), Hana (3.17%), and Woori Financial Group (0.85%) all rebounded. BNK, DGB, and JB Financial Group also showed increases in the 2% to 3% range. As of noon on the same day, KB Financial had risen 0.46%, while Shinhan Financial Group had fallen 0.60%, moving within a stable range.
Chey Jeong-wook, a researcher at Hana Securities, noted, 'There are concerns over the fourth quarter performance and the end-of-year common equity tier 1 (CET1) ratio, but these worries are expected to ease gradually around the time of the fourth quarter earnings announcement set for early February.' He added, 'Investors need to heighten their interest in KB Financial, which has shown a net purchase reversal by foreign investors; Hana Financial Group, where concerns about value-up have significantly impacted stock prices; and BNK Financial, which has the potential for continued improvement in fundamentals.'
However, if the Bank of Korea lowers the base rate at the first Monetary Policy Committee meeting of the new year on the 16th, further rate reductions could lead to an increase in the won-dollar exchange rate. This would negatively affect bank stocks by lowering the standard for return on shareholder contributions, specifically the common equity capital (CET1) ratio.
Additionally, starting this year, the implementation of 'win-win finance season 2,' which will contribute up to 700 billion won annually for the next three years to ease the interest burden for 250,000 small businesses and extend loan deadlines, is also a burdening factor.
Jo Ah-hae, a researcher at MERITZ Securities, stated, 'One of the concerns regarding bank stocks is regulatory risk like the win-win finance season 2.' He added, 'The fact that this support will continue for three years is a burden, but it is expected to contribute somewhat to easing the soundness of banks.'