After Ex-Dividend Date, KOSPI Hits All-Time High... Yet Financial Stocks Are Again Left Behind

The KB Kookmin Bank dealing room in Yeouido, Seoul, after the market closed on the 30th. On this day, the KOSPI closed at a record high of 2873.47. [Image source=Yonhap News]

원본보기 아이콘

[Asia Economy Reporter Minwoo Lee] Despite the year-end ex-dividend date, the KOSPI maintained its upward momentum and closed the stock market at an all-time high this year. Amid this atmosphere, financial stocks were sidelined and continued to underperform.

According to the Korea Exchange on the 31st, Korea Financial Group closed at 79,000 won, down 0.13% from the previous trading day. Industrial Bank of Korea also ended the session at 8,840 won, down 0.45%. This represents a drop of about 7% compared to the closing price on the ex-dividend date, December 28. KB Financial Group recorded the same closing price as the previous day. Shinhan Financial Group and Woori Financial Group also remained slightly positive. Compared to the ex-dividend date, they fell by 3% and 4.2%, respectively. Only Hana Financial Group managed to close up 1.17%, showing resilience.

Accordingly, the KOSPI banking sector index closed at 185.12, down 0.45% from the previous trading day. Compared to December 28, it fell by about 6.7%. This contrasts with the KOSPI’s 2.3% rise during the same period. The KOSPI closed at 2,873.47, marking an all-time high to end the year’s stock market. Financial stocks, traditionally considered dividend stocks, could not avoid the annual event of price drops following the ex-dividend date this year as well. Last year, the KOSPI banking sector index closed at 246.62, down 5.6% from the ex-dividend date (December 26), significantly outperforming the KOSPI’s 0.01% decline during the same period.

In particular, this year, there is a possibility that year-end dividends may decrease compared to previous years, which could further delay stock price recovery after dividends. Recently, financial authorities reportedly prepared a recommendation to lower the dividend payout ratio of financial holding companies from the previous 26-27% level to around 20%. This is aimed at securing loss absorption capacity amid growing uncertainties due to the spread of the novel coronavirus disease (COVID-19).

Concerns have also been raised that funds previously concentrated in bank stocks may shift due to IT companies entering the financial sector, which could burden stock price recovery. Kakao Pay and Kakao Bank, which are scheduled for initial public offerings (IPOs) in the first and second halves of next year, respectively, are representative examples. From a supply-demand perspective, where funds are moving globally toward innovative and high-growth companies, this trend could be disadvantageous for existing financial stocks.

However, there is also a forecast that investment sentiment could recover as financial holding companies continue to maintain stable earnings and the dividend payout ratio may increase next year. Hyesung Kang, a researcher at Mirae Asset Daewoo, said, "Next year, as the low interest rates maintained this year are expected to rise gradually, there is significant potential for improved investment sentiment in the banking sector." He added, "Since loan loss provisions were proactively reflected this year, uncertainties related to COVID-19 are expected to diminish compared to this year, which could restore the attractiveness of dividends."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.