The KOSPI index surged past 7500, driven by a spike in semiconductor stocks, but bank shares remain sidelined in the market rally. Analysts attribute the limited upward momentum to concerns over financial stability and policy uncertainties despite record earnings.
On May 7, Samsung Electronics closed at 271,500 won, up 5,500 won (2.07%) from the previous day, marking a 111.2% increase since the start of the year. Similarly, SK Hynix rose from 677,000 won to 1,654,000 won, a 144.3% jump. The semiconductor sector is leading the KOSPI's overall rise, fueled by expectations of increased demand for artificial intelligence and foreign investment.
In contrast, bank stocks have lagged behind. While the KOSPI has risen 73.7% this year, the KRX Bank Index has only increased by 25.1%. Major financial groups saw limited gains, with KB Financial rising 30.7% from 123,300 won to 161,200 won, and Shinhan Financial increasing 29.1% from 76,600 won to 98,900 won, falling short of the KOSPI's growth.
Despite the recent strong performance of the four major financial groups (KB, Shinhan, Hana, and Woori), which reported a combined net profit of 5.33 trillion won in the first quarter—an 8.1% increase year-on-year—analysts note that the growth in stock prices has been muted. This is partly due to the market already pricing in the banks' shareholder return strategies, including stock buybacks and increased dividends, as investor interest shifts toward high-growth sectors like AI and semiconductors.
Concerns over rising delinquency rates and increased loan loss provisions have also heightened worries about financial stability, while the management of household loans poses additional challenges to bank profitability. Recent comments from President Yoon Suk Yeol and Kim Yong-beom, head of the Presidential Policy Office, criticizing the current credit rating system and interest rate structure have further dampened investor sentiment.
However, analysts maintain that the fundamentals of bank stocks remain solid. Given the trends in market interest rates and lending regulations, there is a strong likelihood of continued improvement in net interest margins (NIM) in the second quarter. While short-term underperformance may persist, a reduction in market concentration could highlight the undervalued appeal of bank stocks.
Hana Securities analyst Choi Jeong-wook stated, "If concerns about interest rates grow, the defensive appeal of bank stocks may resurface, and we expect them to outperform the market this month."
* This article has been translated by AI.
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