Insurance and banking stocks posted notable gains as the KOSPI turned higher late in the session. Expectations of improved profitability from rising long-term interest rates lifted insurers, while bargain-hunting flowed into bank stocks that had recently pulled back.
The KOSPI stood at 6,926.74 as of 2:06 p.m. on the 21st, up 74.16 points, or 1.08%, from the previous session, according to the Korea Exchange (KRX). Although the index rose more than 1%, only 170 stocks advanced while 712 declined. Financial stocks outperformed even as the index's gain failed to broaden into a market-wide rally.
Among insurers, Samsung Fire & Marine Insurance (000810.KS) traded at 659,000 won, up 37,000 won, or 5.95%, from the previous session. Hyundai Marine & Fire Insurance (001450.KS) rose 2.15% to 49,900 won, and Samsung Fire & Marine preferred shares (000815.KS) gained 1.60% to 412,000 won. A Plus Asset (244920.KS), Lotte Insurance (000400.KS) and Hanwha General Insurance (000370.KS) also advanced together.
Insurers have emerged this week as beneficiaries of rising long-term government bond yields. Because insurers invest the premiums they collect from customers in long-term bonds, higher rates can improve investment returns when they buy new bonds or reinvest maturing ones. Improving loss ratios and larger investment gains from the rising stock market have added to earnings expectations.
"The non-life insurance industry is expected to improve steadily from the second quarter of this year through next year," said Park Hye-jin, an analyst at Daishin Securities. "Samsung Fire's loss ratio began improving from the first quarter, and its investment gains improved significantly as the index rose, delivering record earnings in the second quarter." The analyst also assessed that Hyundai Marine's loss ratio, capital ratio and contractual service margin (CSM) indicators had improved overall.
Bank stocks, which had lagged recently, also rebounded. Hana Financial Group (086790.KS) rose 4.54% to 129,000 won, the largest gain among financial holding companies. Shinhan Financial Group (055550.KS) gained 2.77% to 103,900 won, and KB Financial Group (105560.KS) rose 1.75% to 162,800 won. JB Financial Group (175330.KS), iM Financial Group (139130.KS) and Woori Financial Group (316140.KS) also posted gains of around 1%.
Bank stocks had lagged recently as profit-taking followed their sharp gains in the first half and as market leadership shifted toward technology and growth stocks, including semiconductors. Their rebound on the day is attributed to bargain-hunting after their steep short-term declines. An official in the financial investment industry said, "As differentiation among individual stocks deepens across the market, the defensive nature of financial stocks, backed by earnings and dividends, is drawing attention."
