The recent surge in securities stocks can be attributed to the South Korean government’s value-up policy, which aims to reduce corporate tax burdens and encourage shareholder returns. According to the newly announced economic policy direction for the second half of the year, companies that increase shareholder returns by more than 5% compared to the previous three years will receive a 5% tax credit on the increase. Additionally, dividend income tax will be separately taxed at a significantly lower rate.
The alleviation of the project financing (PF) provisioning burden, which had been a significant weight on securities firms, also positively impacted stock prices. This change is part of the government’s recently announced PF normalization plan.
Moreover, the U.S. Consumer Price Index (CPI) for June fell short of expectations, raising hopes for a U.S. interest rate cut. This development further boosted stock prices, as there is growing anticipation that the overall performance of the industry will improve due to the effect of interest rate cuts in the second half of the year.
For instance, Samsung Securities saw a remarkable rise of 22.50% from June 13 to July 12, the highest increase among its peers. Daishin Securities and Kiwoom Securities also experienced significant gains, climbing 11.52% and 11.19%, respectively, during the same period.
According to the Korea Exchange and Koscom on July 14, 26 out of 39 ETFs classified as high-dividend had returns exceeding 10% as of July 12 compared to the beginning of this year. Particularly, five ETFs surpassed 20%, including “TIGER High Dividend Plus TOP10,” which saw a rise of 38.13% during this period. “KODEX U.S. Dividend Premium Active,” which includes U.S. stocks, ranked seventh with an 18.43% return among the 39 ETFs.
Domestic dividend stock ETFs dominated the top seven spots in terms of returns among high-dividend ETFs. The robust performance of these ETFs has led to active investment inflows. “ARIRANG High Dividend Stocks” saw a net inflow of 79.7 billion won (approximately $59 million) in the past month. Considering the total inflow of 156.8 billion won since the beginning of the year, it is evident that funds have concentrated recently as financial-related stocks surged. “TIGER High Dividend Plus TOP10,” which recorded the highest return among high-dividend ETFs, attracted 118.5 billion won this year. “SOL Financial Holding Plus High Dividend,” which was listed on June 25, saw an inflow of 11.4 billion won in about three weeks.
The government’s value-up policy and the alleviation of the PF provisioning burden have created a favorable environment for securities stocks. Coupled with the potential for U.S. interest rate cuts, the outlook for the industry appears promising. Investors are likely to continue showing strong interest in high-dividend ETFs, further driving their performance in the coming months.