Bank stocks and insurance stocks to benefit from interest rate hikes? ‘Banks’ to foreigners, and ‘insurers’ to make judgments based on loss ratio
The Monetary Policy Committee of the Bank of Korea is accelerating rate hikes. In August and November of last year, and in January and April of this year, interest rates were raised by 0.25 percentage points each. As a result, the key interest rate, which fell to 0.5% during the COVID-19 phase, rebounded to 1.5%.
The financial industry is expected to continue raising prices for a while. Inflation is rapidly rising, and there is a high probability that the US will raise the interest rate by 0.5 percentage points at a time in a ‘big step’ hike in May. On the other hand, there are concerns that raising interest rates too quickly could slow the economy, but the opinion that there is not a lot of choice is weighted. Kim Ji-man, an analyst at Samsung Securities, said, “Even if the economic growth forecast is below the 3% forecast of the Bank of Korea, it is higher than the potential growth rate. Inflation is also well above the inflation target of 2%. It is highly likely that interest rate hikes will continue in the future. We maintain the forecast for two additional hikes this year and expect the timings to be July and October.”
As interest rates continue to rise, investors are in a rush to find beneficiaries. Particular attention is paid to banking and insurance stocks.