Meritz Financial, 6 Consecutive Trading Days of Gains
Finance, Fire & Securities Trio Rise Together
Market Cap Nears 14 Trillion KRW... Top 20 in KOSPI
[Asia Economy Reporter Park Jihwan] Meritz Financial Group and Meritz Fire & Marine Insurance are continuously setting new record highs. The market capitalization of Meritz Financial Group's listed companies has surged to nearly 14 trillion won.
According to the Korea Exchange on the 4th, Meritz Financial Group closed at 45,500 won the previous day, marking an all-time high. It has risen for six consecutive trading days. Foreign buying led the stock price increase. Foreign investors have been net buyers for 11 consecutive trading days since the 17th of last month, purchasing stocks worth 49.7 billion won. Meritz Fire & Marine Insurance also closed at 34,500 won the previous day, setting a new record high.
The financial trio of Meritz Group stood out in stock price growth last year as well. Meritz Financial Group ranked 6th in the KOSPI with a 348.52% increase in stock price last year. Meritz Fire & Marine Insurance and Meritz Securities also rose by 129.79% (33rd) and 40.52% (227th), respectively. These figures far exceed the KOSPI's annual growth rate of 3.63%.
Due to the simultaneous stock price strength of the three Meritz Group companies, their combined market capitalization based on the previous day's closing price reached 13.79 trillion won, approaching the 14 trillion won mark, which is within the top 20 of the KOSPI market cap rankings. Compared to one year ago at the end of 2020 (5.55 trillion won), their market cap has increased by 148% (8.24 trillion won).
The rapid rise of Meritz Group-related stocks is underpinned by an aggressive shareholder value enhancement policy through share buybacks. Last year, the three Meritz financial companies announced a total of 10 share repurchase disclosures. Meritz Fire & Marine Insurance made 4 announcements, while Meritz Financial Group and Meritz Securities each made 3. In May last year, the three Meritz financial companies stated, "We will pay dividends at about 10% of net income and implement shareholder value enhancement measures such as share buybacks and cancellations." This initially caused a sharp drop in stock prices as investors interpreted it as a de facto dividend cut. However, the stock price continued to rise as they announced share buybacks sufficient to offset the dividend reduction as planned.
Going forward, Meritz Group's stock prices are expected to be influenced by continued strong performance and shareholder return policies. Jeong Gilwon, a researcher at Mirae Asset Securities, said about Meritz Fire & Marine Insurance, "Whether clear new contract growth and loss ratio stabilization continue will be the long-term benchmark for stock price evaluation." Kim Eungap, a researcher at IBK Investment & Securities, said, "Concerns about shareholder-friendly policies increased after the announcement of dividend payout ratio reduction for Meritz Securities, but they are recovering through share repurchases. If the planned profit cancellation proceeds as scheduled, it is expected to alleviate the disappointment over dividend cuts."
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