The market capitalization (market cap) of bank stocks increased by more than 11 trillion won in just one day. The market caps of securities stocks and insurance stocks also rose by more than 2.5 trillion won and 2.4 trillion won, respectively. Investors seem to be flocking to this sector, which is representative of dividends, due to expectations for increased shareholder returns.
According to the Korea Exchange (KRX) on the 8th, the total market capitalization of the 10 stocks in the KRX Bank Index amounted to 170.1395 trillion won, an increase of 11.277 trillion won from the previous day.
The major surge in stock prices was significantly influenced by the four largest financial holding companies breaking their all-time highs. The market cap increases for the day included ▲KB Financial 2.8991 trillion won ▲Shinhan Financial Group 2.5288 trillion won ▲Hana Financial Group 2.5056 trillion won ▲Woori Financial Group 1.4481 trillion won.
In addition, Industrial Bank of Korea, KakaoBank, JB Financial Group, BNK Financial Group, iM Financial Group, Jeju Bank, and others also saw their stock prices rise.
The market capitalization of 11 stocks in the KRX securities index also increased by 2.5901 trillion won, rising from 42.9245 trillion won the previous day to 45.5146 trillion won today. Mirae Asset Securities had the most notable increase in market cap at 690.1 billion won. Korea Investment Holdings, Shinyoung Securities, and Kiwoom Securities also saw their market caps rise by over 300 billion won in a single day.
The market cap of the 10 stocks in the KRX insurance index also jumped by 2.4625 trillion won. The increases in market cap for Samsung Fire & Marine Insurance and Samsung Life Insurance were significant, rising by 1.0353 trillion won and 780 billion won, respectively.
Expectations for increased shareholder returns were identified as the driving force behind the rise in market capitalization in the banking, securities, and insurance sectors. In the case of bank stocks, if the common equity tier 1 ratio (CET1), a key indicator of capital adequacy, improves further, there are forecasts that shareholder return policies exceeding market expectations may be announced.
Choi Jeong-wook, a researcher at Hana Securities, noted, “Previously, major U.S. banks also announced dividend increases as their CET1 ratios exceeded regulatory requirements, leading to stock price increases.” He added, “Domestic bank stocks are expected to announce share buybacks and cancellations that exceed market expectations during the second quarter (April to June) earnings announcements as their CET1 ratios improve further.”
The government has expressed its commitment to fostering the capital market, which has added to the growth expectations for the securities sector. Jo Ah-hae, a researcher at MERITZ Securities, stated, “As the domestic stock market undergoes structural reforms, including the modernization of the capital market and strengthening corporate finance competitiveness, the brokerage and investment banking (IB) fees of securities firms may increase.”