JPMorgan Chase: The correction of Korean bank stocks is a buying opportunity.

After a night of chaos in South Korea, investors were "worried" and financial stocks were "falling endlessly", but JPMorgan Chase thought that "this is an opportunity".

Recently, analysts in JPMorgan Chase said that the recent correction of Korean financial stocks due to political turmoil provided investors with a buying opportunity, because they expected that Korean banks would continue to strive to improve shareholder returns.

Recently, because the market is worried about the future of the "Enterprise Value Enhancement Plan" launched by the Korean government, bank stocks are "the first to bear the brunt" in the market selling. This move was originally part of the current government's key policy to deal with the long-term decline in stock market valuation, and speculators regarded financial stocks as representatives of betting on improving returns.

In the past two trading days, the stock index of Korean banks fell by more than 9%, among which the share price of KB Financial Group, the parent company of Korea's largest bank, fell by more than 10% today, and the share prices of Shinhan Financial Group and Asiana Financial Group also fell by more than 4%.

However, Jihyun Cho, an analyst in JPMorgan Chase, believes that although the legislative process required for a more effective enterprise value enhancement plan may have lost momentum at present, the efforts made by individual companies may hopefully continue to achieve the operational and shareholder return goals. They said:

"We think the short-term callback is a new entry point."

Therefore, considering the valuation advantages and shareholder returns of these financial groups, JPMorgan Chase maintained its overweight rating on Hana Finance, KB Finance and Shinhan Finance.

Since the beginning of this year, Korean banking stocks have been favored by the market because of their relatively low P/B ratio. It is widely expected that this industry will become the main beneficiary driven by government reform. It is worth noting that before the martial law announced by the President of South Korea, the sub-index of Korean banking stocks hit a new high in more than six years on December 3. JPMorgan Chase analysts stressed:

"We will not focus on the political situation, but pay more attention to the profitability of banks and adequate capital buffers, especially in large banking groups, to support the dividend increase."

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.