Shinhan Chief Foresees a Bull Run in Korean Stock Market
In a recent profound analysis, Shinhan Financial Group Chairman Jin Ok-dong brings to light an optimistic forecast for the Korean stock market, suggesting it could be on the brink of experiencing a bull run similar to that of Japan's. This speculation is anchored in the belief that strategically executed government policies could act as a significant catalyst for undervalued stocks in Korea, particularly in the banking sector which includes Shinhan's shares.
Korean Stocks Poised for Revival
Jin Ok-dong's confidence stems from the incoming market revamp program by Korean financial authorities, intended to combat the long-standing issue of low valuations of Korean stocks. The program, eyed by listed companies and investors alike, aims to inject new life into the equities market by addressing the Korea discount phenomenon. This phenomenon has historically seen Korean listed companies being undervalued compared to their international peers due to factors like low dividend payouts and geopolitical uncertainties.
A Catalyst for Change
One of the highlighted policies includes the creation of a prime index comprised of blue-chip and low price-to-book ratio (PBR) stocks, integrated into an exchange-traded fund. Jin believes this could be the catalyst needed to elevate the market value of companies like Shinhan Financial Group, which currently faces undervaluation with a PBR of around 0.41.
Learning From Japan's Success
Drawing parallels with Japan, Jin points out the significant capital inflows the Japanese stock market witnessed following the implementation of government-backed reforms and incentive programs aimed at enhancing market valuations and earnings. He references the Nippon Individual Savings Account, a tax-saving investment program, as a pivotal factor in attracting global investment towards Japanese equities.
Bullish Movements and Shareholder Returns
Amidst these discussions, the Nikkei index recently hit a 34-year high, showcasing the potent impact of strategic policies on market performance. Jin elaborates on Shinhan’s commitment to increasing shareholder returns, from 36% to 40% this year, by continuing the practice of buying back and cancelling treasury shares every quarter, irrespective of economic conditions.
Looking Ahead
With regulatory bodies adopting a favorable stance towards enhancing shareholder returns, provided companies maintain sufficient capital, the stage is set for a potentially robust bull run in the Korean stock market. Shinhan Financial Group, under Jin Ok-dong’s leadership, is poised to play a pivotal role in this expected market transformation, setting a precedent for other Korean companies to follow suit.
As these developments unfold, investors and market watchers are keenly observing the impact of the Korean government's policies on reviving the stock market and potentially mirroring Japan's successful financial strategies.
Analyst comment
Positive news. Analyst: The Korean stock market is likely to experience a bullish trend, following the implementation of government policies aimed at addressing undervaluation issues. Shinhan Financial Group is expected to benefit from the market revamp program and increase shareholder returns, potentially setting a precedent for other Korean companies.
