Hanwha Life Insurance, Once a Penny Stock, Now Back Above 3,000 Won

[Asia Economy Reporter Koh Hyung-kwang] Hanwha Life Insurance's stock price, which had fallen to penny stock levels last year, has recently shown a sharp upward trend, rising to the 3,000 won range. This appears to reflect expectations of improved earnings due to the rise in long-term bond yields.

According to the Korea Exchange on the 8th, Hanwha Life closed at 3,360 won on the KOSPI market the previous day, up 26.5% from the previous trading day. It rose 43.5% over the past three consecutive trading days. This is the highest increase among insurance stocks. Considering that it fell to the 800 won range in March last year, it has nearly quadrupled in less than a year.

In particular, the trading volume on the previous day was about 123.28 million shares, overwhelmingly ranking first among all KOSPI-listed stocks, attracting significant investor interest. The market capitalization based on the previous day's closing price is 2.9182 trillion won, approaching a recovery to 3 trillion won.

The recent momentum in Hanwha Life's stock price is interpreted as being due to the rise in long-term bond yields. On the previous day in the Seoul bond market, the 10-year government bond yield rose by 0.008 percentage points to 1.739% per annum. This is the highest level in the past year.

When long-term bond yields rise, the spread profit of life insurance companies (profits generated from the difference between the investment asset yield and the assumed interest rate) increases. Among them, Hanwha Life has a bond ratio of 60% in its total investment portfolio, which is higher compared to other securities firms. As yields rise, profits increase accordingly.

Im Hee-yeon, a senior researcher at Shinhan Financial Investment, explained, "Life insurance companies typically structure their asset portfolios centered on long-term bonds to stably pay insurance benefits, and Hanwha Life has the highest bond ratio among competitors at 59.3% of its total investment portfolio. The recent high volatility in Hanwha Life's stock price can also be seen as reflecting the rise in long-term bond yields."

With forecasts that market interest rates will rise this year, a short-term rebound in life insurance stocks is also anticipated. Kim Ji-young, a researcher at Kyobo Securities, said, "As interest rates rise, profitability leads to an increase in insurance companies' investment asset yields. Investment income of insurance companies can increase, and the burden of variable annuity guarantee reserves can be eased, which may positively impact the profit improvement of life insurance companies."

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