Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Foreigners net purchased 2.6 trillion won worth of five major Korean bank stocks from 8/26/2021 to 2/11/2022. Foreigners were net buyers of 1.8 trillion won worth of KOSPI stocks.</li>
<li>This means that foreigners were net sellers of 0.8 trillion won worth of other KOSPI stocks (excluding the five major banking stocks). </li>
<li>The five major bank stocks in Korea currently have average dividend yield of 5.4%. DPS for the five major Korean banks increased by 70.9% YoY on average in 2021.</li>
</ul>


Foreigners net purchased 2.6 trillion won worth of five major Korean bank stocks from 8/26/2021 to 2/11/2022. Foreigners were net buyers of 1.8 trillion won worth of KOSPI stocks.
This means that foreigners were net sellers of 0.8 trillion won worth of other KOSPI stocks (excluding the five major banking stocks). 
The five major bank stocks in Korea currently have average dividend yield of 5.4%. DPS for the five major Korean banks increased by 70.9% YoY on average in 2021.


Shinhan Financial Group: Chairman Buys Shares, Capital Flows Analysis, & Higher Dividends Likely

Cross Asset Strategy

<ul>
<li>In this insight, we provide an evidenced based analysis of Bank of Korea (BOK) base interest rate changes and Korean banks' share price performances from August 2008 to February 2022.</li>
<li>Specifically, we compare the average share price performances of five major banking groups in Korea (KB, Shinhan, Hana, Woori, and Woori) versus KOSPI in six different time periods.</li>
<li>The major Korean banking groups generally outperformed the market in periods of rising interest rates and underperformed the market in periods of falling interest rates.</li>
</ul>


In this insight, we provide an evidenced based analysis of Bank of Korea (BOK) base interest rate changes and Korean banks' share price performances from August 2008 to February 2022.
Specifically, we compare the average share price performances of five major banking groups in Korea (KB, Shinhan, Hana, Woori, and Woori) versus KOSPI in six different time periods.
The major Korean banking groups generally outperformed the market in periods of rising interest rates and underperformed the market in periods of falling interest rates.


Evidenced Based Analysis of BOK Base Interest Rate Changes & Korean Banks' Share Price Performances

Quantitative Analysis

<ul>
<li>In this insight, we provide the recent trends of the ETF market size growth as well as the breakdown of the best performing sector/thematic ETFs in Korea.</li>
<li>The ETFs daily transaction value as a percentage of KOSPI daily transaction value was 1.1% in 2002, which increased to 11.3% in 2012 and 31.5% in 2020.</li>
<li>The banks and dividends related ETFs have been clear winners YTD.</li>
</ul>


In this insight, we provide the recent trends of the ETF market size growth as well as the breakdown of the best performing sector/thematic ETFs in Korea.
The ETFs daily transaction value as a percentage of KOSPI daily transaction value was 1.1% in 2002, which increased to 11.3% in 2012 and 31.5% in 2020.
The banks and dividends related ETFs have been clear winners YTD.


ETF Market Growth in Korea & Breakdown of the Best Performing Sector/Thematic ETFs in Korea YTD

Bond market data and technology, BondEvalue

BondEvalue

Bond market data and technology

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Bond Market Data and Technology

Credit

US equities ended lower again with the S&amp;P and Nasdaq down 0.7% and and 0.6%. Barring Materials and Real Estate which were marginally in the green, all other sectors were in the red with Utilities, Communication Services and Financials falling over 1%. US 10Y Treasury yields are flat at 1.61%. European stocks were mixed with the DAX and CAC near flat while the FTSE was up 0.7%. Brazil’s Bovespa ended 0.6% lower. In the Middle East, UAE’s ADX was up 0.7% and Saudi TASI was down 0.5%. Asian markets opened lower with Shanghai, HSI and the Nikkei down 0.7%, 0.8% and 0.9% and the STI down 0.4%. EU Main CDS spreads were 1bp wider and Crossover CDS spreads widened 4.5bp. Asia ex-Japan CDS spreads widened sharply again, by 7.5bp as Chinese property developers’ bonds plummet and uncertainty on defaults loom.

5 New Deals incl. Kexim, KEB Hana; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers ...

Event-Driven

<p><strong><a href="https://www.smartkarma.com/entities/woori-financial-group-inc" target="_blank" data-smartkarma-citation="entities:27995:1" rel="noopener">Woori Financial Group (316140 KS)</a> announced that it plans a full privatization of the company by the end of 2021.</strong> Currently, Woori Financial's largest shareholder is Korea Deposit Insurance Corporation (KDIC) which has a 15.1% in the company. Korean government backed KDIC plans to sell at least 10% stake in <a href="https://m.stock.naver.com/index.html#/news/ranknews/view/018/0005034309" target="_blank" rel="noopener">Woori Financial</a> by the end of 2021.</p><div class="content-highlight">
<p>One of the positives of Woori Financial after the privatization is completed is that the new controlling shareholder may try to improve various corporate governance policies in order to boost the total shareholder returns including paying higher dividends and completing higher share buyback with cancellations. </p>
<p>With the announcement of the privatization of Woori Financial Holdings by the end of 2021, an attractive long-short trading idea in the Korean financial sector would be to go long <a href="https://www.smartkarma.com/entities/woori-financial-group-inc" target="_blank" data-smartkarma-citation="entities:27995:1" rel="noopener">Woori Financial Group (316140 KS)</a> and go short <a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">KakaoBank (323410 KS)</a>.</p>
</div>

Woori Financial Group (316140 KS) announced that it plans a full privatization of the company by the end of 2021. Currently, Woori Financial's largest shareholder is Korea Deposit Insurance Corporation (KDIC) which has a 15.1% in the company. Korean government backed KDIC plans to sell at least 10% stake in Woori Financial by the end of 2021.
One of the positives of Woori Financial after the privatization is completed is that the new controlling shareholder may try to improve various corporate governance policies in order to boost the total shareholder returns including paying higher dividends and completing higher share buyback with cancellations. 
With the announcement of the privatization of Woori Financial Holdings by the end of 2021, an attractive long-short trading idea in the Korean financial sector would be to go long Woori Financial Group (316140 KS) and go short KakaoBank (323410 KS).


Privatization of Woori Financial by the End of 2021

South Korea

Hana Financial Group Inc., in accordance with Financial Holding Companies Act, was established on December 1, 2005, through stock transfer with the former shareholders of its subsidiaries in order to provide management services and financing to associated companies.

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Hana Financial (086790 KS)

Shinhan Financial Group: Chairman Buys Shares, Capital Flows Analysis, & Higher Dividends Likely

Foreigners net purchased 2.6 trillion won worth of five major Korean bank stocks from 8/26/2021 to 2/11/2022. Foreigners were net buyers of 1.8...

Douglas Kim

ETF Market Growth in Korea & Breakdown of the Best Performing Sector/Thematic ETFs in Korea YTD

In this insight, we provide the recent trends of the ETF market size growth as well as the breakdown of the best performing sector/thematic ETFs in...

Douglas Kim

5 New Deals incl. Kexim, KEB Hana; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers ...

US equities ended lower again with the S&P and Nasdaq down 0.7% and and 0.6%. Barring Materials and Real Estate which were marginally in the...

BondEvalue

Privatization of Woori Financial by the End of 2021

Woori Financial Group announced it plans a full privatization of the company by the end of 2021. An attractive long-short trading idea would be to...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shinhan Financial Group: Chairman Buys Shares, Capital Flows Analysis, & Higher Dividends Likely

Foreigners net purchased 2.6 trillion won worth of five major Korean bank stocks from 8/26/2021 to 2/11/2022. Foreigners were net buyers of 1.8...

Douglas Kim

Evidenced Based Analysis of BOK Base Interest Rate Changes & Korean Banks' Share Price Performances

In this insight, we provide an evidenced based analysis of Bank of Korea (BOK) base interest rate changes and Korean banks' share price...

Douglas Kim

ETF Market Growth in Korea & Breakdown of the Best Performing Sector/Thematic ETFs in Korea YTD

In this insight, we provide the recent trends of the ETF market size growth as well as the breakdown of the best performing sector/thematic ETFs in...

Douglas Kim

5 New Deals incl. Kexim, KEB Hana; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers ...

US equities ended lower again with the S&P and Nasdaq down 0.7% and and 0.6%. Barring Materials and Real Estate which were marginally in the...

BondEvalue

Privatization of Woori Financial by the End of 2021

Woori Financial Group announced it plans a full privatization of the company by the end of 2021. An attractive long-short trading idea would be to...

Douglas Kim