Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul>
<li>On Friday 10 March, Svb Financial (SIVB US) suddenly collapsed, becoming the largest bank to fail in the United States since the 2008 financial crisis.</li>
<li>In our view, the collapse of SVB Financial will likely have a negative near-term impact on the Korean banks. </li>
<li>Three ways that this will negatively impact Korean banks include risk-off investment sentiment, greater excuse to hold on to cash by Korean banks, and lower interest rate spreads. </li>
</ul>


On Friday 10 March, Svb Financial (SIVB US) suddenly collapsed, becoming the largest bank to fail in the United States since the 2008 financial crisis.
In our view, the collapse of SVB Financial will likely have a negative near-term impact on the Korean banks. 
Three ways that this will negatively impact Korean banks include risk-off investment sentiment, greater excuse to hold on to cash by Korean banks, and lower interest rate spreads. 


Collapse of Silicon Valley Bank (SVB) - Impact on Korean Banks

Cross Asset Strategy

<ul>
<li>Despite differences in views on the legacy of Abenomics, many people agree that Abenomics played a key role and was a clear tipping point for corporate governance improvements in Japan.</li>
<li>Likewise, we believe Yoonomics will follow similar steps and make significant efforts to improve corporate governance reforms in Korea. </li>
<li>So far in 2023, CORPORATE ACTIVISM has been THE MOST IMPORTANT TOPIC in Korea's equity markets. </li>
</ul>


Despite differences in views on the legacy of Abenomics, many people agree that Abenomics played a key role and was a clear tipping point for corporate governance improvements in Japan.
Likewise, we believe Yoonomics will follow similar steps and make significant efforts to improve corporate governance reforms in Korea. 
So far in 2023, CORPORATE ACTIVISM has been THE MOST IMPORTANT TOPIC in Korea's equity markets. 


Abenomics Vs Yoonomics: Tipping Points of Corporate Governance Reforms in Japan and Korea

<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

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Market dynamics remain healthy which suggests a new broad-based bull market is not far off. With that said, we are still waiting for confirmation in the form of breakouts or bullish price inflections on the broad global indexes (ACWI-US, ACWX-US, EFA-US, and EEM-US) in order to turn bullish.<ul type="disc">
<li>
Actionable Theme: Major Autos/Auto Parts. Global automobile stocks display bullish price and RS inflections with many breaking out to new highs -- add exposure... see pages 3 and 5-6.</li>
<li>
Actionable Theme: Financials. There continues to be a plethora of attractive Financial stocks globally, ranging from banks and insurance to financial services -- add exposure... see pages 4 and 6-14.</li>
</ul>

Market dynamics remain healthy which suggests a new broad-based bull market is not far off. With that said, we are still waiting for confirmation in the form of breakouts or bullish price inflections on the broad global indexes (ACWI-US, ACWX-US, EFA-US, and EEM-US) in order to turn bullish.

Actionable Theme: Major Autos/Auto Parts. Global automobile stocks display bullish price and RS inflections with many breaking out to new highs -- add exposure... see pages 3 and 5-6.

Actionable Theme: Financials. There continues to be a plethora of attractive Financial stocks globally, ranging from banks and insurance to financial services -- add exposure... see pages 4 and 6-14.


Buying Global Financials & Autos/Auto Parts

Our biggest concerns have stemmed from a handful of large-cap China internet names, which have held back the MSCI EM and Hang Seng indexes. We are also getting a breakout above $93.50-93.75 on the US dollar, a concerning risk-off signal. Still, our list of concerns remains short, and our outlook remains neutral yet constructive overall.

Our biggest concerns have stemmed from a handful of large-cap China internet names, which have held back the MSCI EM and Hang Seng indexes. We are also getting a breakout above $93.50-93.75 on the US dollar, a concerning risk-off signal. Still, our list of concerns remains short, and our outlook remains neutral yet constructive overall.

Global Cyclical Value Sectors Improving -- Buying Financials and Energy Names: ING Groep, Many More

South Korea

Woori Financial Group Inc. provides commercial banking services. The Company offers deposit services, loan services, bill services, settlement services, credit card, international, online banking, and other related services. Woori Financial Group also operates banking and retail banking businesses.

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Woori Financial Group (316140 KS)

Collapse of Silicon Valley Bank (SVB) - Impact on Korean Banks

The collapse of SVB Financial will negatively impact Korean banks due to risk-off investment sentiment, greater excuse to hold on to cash by Korean...

Douglas Kim

Abenomics Vs Yoonomics: Tipping Points of Corporate Governance Reforms in Japan and Korea

Similar to how Abe left a legacy of significant improvements to corporate governance reforms in Japan, Yoon is also likely to seek a major...

Douglas Kim

Buying Global Financials & Autos/Auto Parts

Global automobile stocks display bullish price and RS inflections with many breaking out to new highs. Financials are attractive globally, ranging...

Vermilion Research

Global Cyclical Value Sectors Improving -- Buying Financials and Energy Names: ING Groep, Many More

Continued rising rates is likely to support value Sectors moving forward (especially Financials and Energy), and it also typically indicates...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Collapse of Silicon Valley Bank (SVB) - Impact on Korean Banks

The collapse of SVB Financial will negatively impact Korean banks due to risk-off investment sentiment, greater excuse to hold on to cash by Korean...

Douglas Kim

Abenomics Vs Yoonomics: Tipping Points of Corporate Governance Reforms in Japan and Korea

Similar to how Abe left a legacy of significant improvements to corporate governance reforms in Japan, Yoon is also likely to seek a major...

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

Buying Global Financials & Autos/Auto Parts

Global automobile stocks display bullish price and RS inflections with many breaking out to new highs. Financials are attractive globally, ranging...

Vermilion Research

Global Cyclical Value Sectors Improving -- Buying Financials and Energy Names: ING Groep, Many More

Continued rising rates is likely to support value Sectors moving forward (especially Financials and Energy), and it also typically indicates...

Vermilion Research