[Into the Stocks] Korea Financial Group, How Long Will the Second Largest Shareholder National Pension Service Continue Selling?

National Pension Service Sold Over 170,000 Shares of Korea Financial Group Last Month
Sold More Than 700,000 Shares This Year, Reducing Stake from 11.31% to 9.08%
Brokerage Firms' Earnings Plunge... Earnings Shock Expected in Q2 as Well

[Asia Economy Reporter Ji Yeon-jin] The National Pension Service (NPS) has been continuously selling shares of Korea Financial Group. This selling trend is interpreted as a response to the expected 'earnings shock' for domestic securities firms due to a sharp decline in trading volume in the second quarter of this year.

According to the Financial Supervisory Service's electronic disclosure system on the 25th, the NPS sold 176,494 shares of Korea Financial Group in June alone, reducing its stake to 9.08%. The NPS is the second-largest shareholder of Korea Financial Group, with a stake of 11.31% as of the end of last year. However, since the beginning of this year, as U.S. monetary tightening intensified, investment sentiment deteriorated, trading volume in the stock market sharply declined, and losses on bond investments expanded, signaling red flags for securities firms' performance and leading to continued selling. So far this year, the NPS has sold over 700,000 shares of Korea Financial Group.

Korea Financial Group wholly owns Korea Investment & Securities and also holds various investment companies such as asset management firms Korea Investment Management and Korea Investment Value Asset Management, as well as Korea Investment Savings Bank and Korea Investment Capital. The majority of its revenue comes overwhelmingly from Korea Investment & Securities. Domestic securities firms have seen deteriorating investor sentiment this year, with a shrinking initial public offering (IPO) market, a sharp drop in brokerage fees due to stock market instability and soaring interest rates, and a significant reduction in trading profits. Securities firms' net profit decreased by 40.5% year-on-year to 893.7 billion KRW. This decline is due to reduced brokerage profits from lower trading volume, decreased wealth management (WM) and asset management profits caused by rising interest rates and stock market volatility, and reduced fees related to the shrinking traditional investment banking (IB) market. The only bright spot was the real estate project financing (PF) sector, which advanced due to a favorable real estate market. Korea Financial Group's net profit this year also fell by 30.29% year-on-year to 338.1 billion KRW. The second-quarter performance is bleak as well, with Daishin Securities forecasting a 31.2% year-on-year decrease to 207.6 billion KRW.

Korea Financial Group's stock price soared to 121,000 KRW in April last year but has steadily declined since, plunging to 55,300 KRW on the 15th, marking a 52-week low. During this period, the stock price dropped by more than 50%. Park Hye-shin, a researcher at Daishin Securities, said, "This domestic securities stock has been falling for 15 consecutive months, and the 'historical lowest point' as a buying opportunity has long lost its persuasiveness," adding, "The negative factors of declining trading volume, rising interest rates, and poor index performance are already reflected in the stock price, so there is potential for upward momentum at the interest rate inflection point." Park expects to see signs of improvement in the securities industry during the third quarter of this year.

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