Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Hanwha Life's stock nosedives amid zero-range rates
By Anna J. Park
By Anna J. Park
Hanwha Life Life's stock continues to record all-time lows amid negative expectations on profit earnings and unfavorable conditions such as zero-range interest rates. The share price continued its losing streak for the 11th straight day March 19, finishing at 917 won ($0.72). Just this year alone, the life insurance company's stock price has fallen by 59.9 percent from 2,290 won on Jan. 2.
Compared to the price one year ago, the stock's value plummeted by 78 percent from 4,180 won on March 19, 2019. The company's market cap has also plunged to 796.4 billion won from some six trillion won in 2018.
Other insurance companies, such as Samsung, Mirae Asset, and TongYang, also suffered significant drops in their share prices. According to the Korea Exchange, the KRX insurance index, which is comprised of 11 listed insurance stocks, fell by 43 percent on March 18 from the start of the year. Given the widespread slump of the insurance industry, Hanwha Life's shares still saw the highest percentage price cut.
Market watchers say global interest rates that are nearing zero percent create a structural low growth environment for life insurance companies, and Hanwha Life's profitability has been evaluated as the worst among its peers.
“Simply put, the plunged stock price means that investors' outlook on the company's profit remains very poor,” Chung Tae-joon, analyst from Yuanta Securities Korea, told The Korea Times.
“The key culprit behind the poor performance is the fact that BOK's key interest rate has fallen to a zero-range figure. If BOK's key interest rate continues to be lowered, then the company will face the burden of a reverse margin,” he added. “Gloomy outlook for the insurer's earnings this year can also be blamed for the plummet in price.”
According to the FSS, last year's net profits of all insurance companies in Korea stood at about 5.33 trillion won, down 26.8 percent from the previous year, one of the lowest levels in the past decade. Social distancing due to COVID-19 also hampers insurance companies' expected sales for this year as sellers cannot meet potential customers in person.