[Special Stock] Interest Rates to Rise Continuously... Leading Beneficiary Insurance Stocks Rally Together

[Asia Economy Reporter Lee Seon-ae] Insurance stocks, considered representative beneficiaries during periods of interest rate hikes, are showing simultaneous strength.

As of 10:12 AM on the 6th, Lotte Insurance is trading at 2,015 KRW, up 6.05%, Hyundai Marine & Fire Insurance is up 4.75% at 33,100 KRW, Hanwha General Insurance is up 4.31% at 5,320 KRW, DB Insurance is up 3.46% at 71,800 KRW, Meritz Fire & Marine Insurance is up 2.68% at 47,950 KRW, Heungkuk Fire & Marine Insurance is up 3.51% at 4,125 KRW, and Samsung Fire & Marine Insurance is up 1.86% at 219,000 KRW.

The U.S. Federal Reserve (Fed) has hinted at the possibility of starting interest rate hikes and quantitative tightening next month, which is interpreted as the reason domestic insurance stocks are showing concurrent strength. The Fed stated yesterday that it will respond strongly to inflationary pressures. Lael Brainard, nominated as Vice Chair, said, "We will begin to rapidly reduce the balance sheet (quantitative tightening) as early as the May meeting and continue monetary policy tightening by raising interest rates consecutively."

She also suggested that the year-end benchmark interest rate could exceed 2%. The 10-year Treasury yield rose 15.4 basis points (1bp=0.01%p) from the previous day to 2.55%, marking the highest level since March 2019. The yield spread between the 2-year and 10-year bonds turned positive, rising by 4 basis points.

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