Tech-led gains overshadow banks amid earnings, regulatory uncertainty
Kospi’s record-breaking advance this year has largely bypassed financial stocks, with heavyweight banks lagging well behind the broader market’s surge.
Seoul’s benchmark index has climbed 8 percent already this year, crossing the 4,600-point mark for the first time and extending a five-day streak of fresh records Thursday. Over the same period, the combined stock value of Korea’s four major banking groups — KB, Shinhan, Hana and Woori — rose just 0.4 percent, effectively remaining flat. Measured against their peaks over the past year, their combined value remains down about 8 percent.
Analysts say the divergence reflects sector rotation rather than bank-specific weakness, with investors’ money gravitating toward technology and artificial intelligence-linked shares.
“Amid the absence of notable early-year catalysts, both domestic institutions and foreign investors have remained largely on the sidelines in bank stocks, leaving trading activity without a clear direction,” said Choi Jeong-wook, an analyst at Hana Securities. “Banks have continued to be sidelined as the Kospi’s rally, driven by a surge in IT stocks, persists.”
Samsung Electronics and SK hynix, the country’s two largest chipmakers and key drivers of the rally, have each gained about 20 percent from their end-2025 levels, extending a run of record highs this week.
Park Hye-jin, an analyst at Daishin Securities, cited temporary headwinds such as weaker-than-expected earnings and lingering uncertainty over potential penalties as additional factors weighing on bank stocks.
“The combined fourth-quarter net profit of the four financial groups is expected to fall more than 20 percent short of the consensus estimate of 2.6 trillion won ($1.8 billion),” Park said, adding that the key swing factor for earnings will be the size of provisions booked for potential penalties tied to Hong Kong equity-linked securities misselling and alleged loan-to-value ratio collusion.
Yet, experts mostly expect financial stocks to resume a steady uptrend this year, arguing that the recent underperformance reflects timing and positioning rather than a deterioration in fundamentals.
“The financial stocks still have ample room for further upside this year,” said Kim Jae-woo, an analyst at Samsung Securities. He cited an improving macro backdrop, including a cyclical economic recovery and easing interest rates, alongside policy tailwinds such as the introduction of separate taxation on dividend income and stronger frameworks for shareholder returns.
“With bank stocks still trading at attractive valuations, with a price-to-book ratio of around 0.7, further gains in earnings and shareholder returns are likely to serve as key drivers,” Kim said.
Hana’s Choi said the underperformance is unlikely to persist, adding that investor sentiment should improve once the scale of penalties is clarified. “Higher year-end dividends aimed at qualifying for preferential tax treatment, along with the possible passage of the revised Commercial Act in January, could turn supportive,” Choi said.
As of Thursday morning, shares of KB Financial Group were trading at 125,200 won, while Hana Financial Group stood at 93,300 won, Shinhan Financial Group at 78,900 won and Woori Financial Group at 27,600 won.
