"Will I Be the Only One Buying at the Peak Again?"... Foreign Investors Exit Financial Stocks Amid Unsettling Rally

[The Financial News] As domestic financial holding companies ramp up their competition to return profits to shareholders, their share prices have surged. Some investors, including foreign funds, are now selling financial stocks to lock in gains. Even so, market analysts say the financial holding companies are expected to deliver solid earnings again this year, leaving room for further upside.
According to the financial sector on the 27th, the four major financial holding companies (KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group) have posted record earnings for two consecutive years and are now carrying out large-scale share buybacks and cancellations.
KB Financial Group, which brands itself as a "national dividend stock," paid out a total of 1.58 trillion won in cash dividends last year. This was a 32% increase from the previous year, bringing its annual payout ratio to around 27%. For this year, it plans to allocate a record 2.82 trillion won for its first round of shareholder returns, including 1.62 trillion won for cash dividends and 1.2 trillion won for share repurchases.
Shinhan Financial Group plans total shareholder returns of about 2.5 trillion won, including 1.25 trillion won in cash dividends and 1.25 trillion won for share buybacks. It already bought back its own shares worth 200 billion won last month and intends to step up repurchases, including an additional 500 billion won this month, through July.
Hana Financial Group also announced a plan to buy back and cancel 400 billion won worth of its own shares in the first half of this year, executing 200 billion won each in the first and second quarters. Woori Financial Group will increase the size of its share buyback and cancellation program to 200 billion won this year, about 33% more than last year.
The aggressive expansion of shareholder returns has drawn strong attention from the market. From the start of this month through the 26th, KB Financial Group's share price jumped from 135,200 won to 165,300 won, a gain of 22.26%. Over the same period, Shinhan Financial Group rose 18.51%, from 84,300 won to 99,900 won. Hana Financial Group (24.78%) and Woori Financial Group (25.12%) have also posted steep rallies.
Institutional and retail investors have provided strong buying support, helping to drive the rally. This month, institutional investors purchased 373.6 billion won of KB Financial Group shares and 176.8 billion won of Shinhan Financial Group shares. Retail investors bought 117.9 billion won of Woori Financial Group and 45.9 billion won of KB Financial Group over the same period.
Foreign investors, by contrast, have been selling financial stocks to take profits. This month alone, foreign investors dumped 413.5 billion won of KB Financial Group shares. Notably, they have recorded net selling for 12 consecutive trading days since the 6th. They also sold 251 billion won of Woori Financial Group and 134.3 billion won of Hana Financial Group, trimming their positions.
Despite this, many in the market expect the share prices of the four major financial groups to keep rising this year, supported by resilient earnings and expanding shareholder returns.
Kim Jae-woo, an analyst at Samsung Securities, said, "The visibility of earnings improvement for financial holding companies is even clearer this year," adding, "With the introduction of separate taxation on dividend income and tax-exempt dividends, investors can also expect a tangible boost to their returns."
Kim In, an analyst at BNK Securities, noted, "Given that their shareholder return ratios are among the highest compared with overseas banks, the recent share price gains can be seen as part of a normalization process for their Price-to-Book Ratio (P/B Ratio)."

zoom@fnnews.com Lee Jumi Reporter