Kakao Pay, Kakao Bank gain ground on aggressive pension buying

[Photo by MK DB]

Kakao Corp.’s financial stocks have ceased to nosedive on heavy buying by pension funds.

Shares of South Korea’s online-only bank Kakao Bank closed at 41,300 won ($33.3) on Monday, gaining 7 percent from May 13 closing of 38,450 won. On Tuesday, its shares were trading a tad lower at 40,500 won.

Shares of digital wallet company Kakao Pay surged 26 percent from 86,000 won to 108,500 won during the same period. On Tuesday, shares were up 0.46 percent at 109,000 won.

The boost in prices comes on buying spree by pension funds. The investors net purchased Kakao Bank shares for six trading days in a row and Kakao Pay shares 11 days. Kakao Bank made its name as the fourth-most sought stock by pension funds in the Korean stock market over the past week and Kakao Pay the fifth-most sought stock.

Kakao Bank and Kakao Pay stocks were regarded as being in the technology category rather than financial category and were not considered beneficiaries in an interest rate hike environment. Shares of Kakao Pay and Kakao Bank stocks, along with their parent Kakao Corp., declined every month this year except for February, whereas stocks of major banks joined in KRX Bank Index and major lenders, insurers, and brokerages in KRX 300 Index rose every month except for April.

The recent fall in price-to-book ratio (PBR), meanwhile, has boosted valuation of the two Kakao stocks. Analysts also noted that they have joined on the line of stocks whose prices are projected to gain in the second half of the year.

They noted that long-term buying by pension funds show that Kakao Bank and Kakao Pay stocks have hit their bottom peaks and are on rebound.

Kakao Pay’s PBR is 8.08 times, which is 60 percent of 13.59 times in the fourth quarter of last year when its stock price was at its annual peak. Kakao Bank’s PBR also fell from 5.93 times to 3.55 times.

Kakao Bank, in particular, is projected to post strong second-quarter earnings versus traditional lenders, allowing its stock to continue to gain ground.

Kakao Bank’s net interest income in the coming four months is expected to grow at an annual average of 23 percent thanks to loan growth versus traditional banks and rise in net interest margin, said Choi Jeong-wook, researcher at Hana Financial Investment.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]