KB Securities Focuses on 'Target Conversion Products' Utilizing Oversold Stock Assets

[Asia Economy Reporter Oh Ju-yeon] KB Securities announced on the 9th that it will focus on 'target conversion-type products' utilizing stock assets that have experienced excessive declines compared to their valuations due to the impact of the novel coronavirus infection (COVID-19) as its main products in April and May.

Although the global stock market has shown some recovery since April after a sharp decline until mid-March, it still exhibits high volatility. KB Securities explained that it is advisable to invest in assets that are absolutely undervalued with limited downside potential even if additional negative issues arise.

Looking at the PBR (Price-to-Book Ratio), an indicator that evaluates the stability of asset prices, as of the 8th based on Bloomberg data, the S&P 500 index traded between 1.9 and 3.7 times over the past 10 years, but recently recorded 2.9 times after a 22% drop from its peak. The Euro Stoxx 50 is at 1.3 times, down 28% from its peak of 1.8 times; the HSCEI (Hong Kong Hang Seng China Enterprises Index) is at 1.0 times, down 33% from its peak of 1.5 times; and the Nikkei 225 index is at 1.4 times, down 26% from its peak of 1.9 times.

The KOSPI is at 0.7 times, having fallen 50% from its peak of 1.4 times, indicating an absolutely undervalued level.

A KB Securities official stated, "The stock indices of major global countries such as Korea, the United States, Europe, Japan, and China are at their lowest PBR levels in the past 10 years, representing an absolutely undervalued phase compared to valuations, making them highly attractive for investment."

Accordingly, KB Securities plans to focus on launching target conversion-type products utilizing excessively declined stock assets in April and May.

In collaboration with asset management companies and advisory firms that excel in stock selection capabilities within the industry, various target conversion-type equity funds will be launched aiming to achieve appropriate returns considering customers' investment preferences and risk tolerance levels.

Additionally, KB Securities believes that the undervaluation situation in major countries' stock markets has created investment momentum for equity-linked securities (ELS) based on these underlying assets, and plans to activate the release of public ELS products using these stock indices on a weekly basis.

Recently launched ELS products are highly attractive in terms of stability, early redemption possibility, and profitability due to lowered knock-in barriers and early redemption barriers caused by increased volatility of the underlying indices.

Shin Geung-ho, head of the IPS division, diagnosed, "The current stock market is a phase where additional crises and great opportunities coexist, but the crisis will be limited," and added, "We will do our best to actively respond to market fluctuations through systematic post-management of the launched target conversion-type products so that customers can invest with peace of mind."

This content was produced with the assistance of AI translation services.