Financial group shares lose momentum on foreign selloff

By Jhoo Dong-chan

Korea's financial groups have enjoyed record high earnings in 2019, but their share prices have remained sluggish due to foreign selloff caused by a series of skeptic outlooks on their future earnings.

In a bid to encourage investment, financial group chairmen have made all-out efforts to prevent stock prices from further declining by buying back their firms' shares and leading investor roadshows.

However, share prices of each firm fell over various negative external factors such as the Sino-America trade row, slowdown in Korea's growth and the country's low interest rate trend.

According to the Korea Exchange, share price of Shinhan Financial Group closed at 42,650 won ($35.67) on the Tuesday session, down 200 won, or 0.47 percent from the previous session.

The figure is also down over 1,500 won from its share price on Sept. 21, 2018.

Share prices of KB, Hana and Woori Financial Group closed at 44,000 won, 35,850 won and 12,600 won, respectively, on the day. Each is also down 7,500 won, 7,350 won and 3,800 won from a year earlier.

Their disappointing share prices were attributed to foreign investors' exit over the nation's economic slowdown and low interest rate trend.

Foreign investors accounted for a 69.1 percent stake in Shinhan Financial Group on Sept. 21 last year, but declined to 65.45 percent on Tuesday.

The trend is also evident in KB and Hana Financial Group as foreign investors accounted for 70.1 percent and 71.2 percent, respectively, on the day last year, but slid to 66.9 percent and 67.2 percent in the period.

Woori is the only firm that added 1.8 percentage points to 29.3 percent in the period.

“Financial groups posted a series of record earnings over the past year, but their share prices stagnated below market expectations due to various external factors,” said KB Securities analyst Yoo Seung-chan.

“Especially, Shinhan is expected to post solid earnings not only this year but also next year as they merged Orange Life to strengthen their insurance business. We believe not only Shinhan but also other financial groups' share prices will recover once external factors show signs of settlement.”

KB Securities set Shinhan Financial Group's target share price at 55,000 won.