Hanwha Aerospace and Hanwha Ocean, as well as Hanwha System, Hanwha Engine, and holding company Hanwha Corp., are experiencing a surge in stock prices. Analysts suggest that the emergence of a Hanwha Group Exchange-Traded Fund (ETF) contributing to the simultaneous surge in Hanwha Group stocks is a key factor.
Hanwha Asset Management launched the 'Plus Hanwha Group' ETF in December last year, emphasizing its portfolio's capability to invest across various sectors, including shipbuilding, defense and aerospace, and solar energy, as well as the financial industry. As Hanwha Aerospace and Hanwha Ocean surged at the beginning of the year, the net worth surpassed 70 billion won within two months of the ETF's launch.
As the ETF price rises, Hanwha Life, Hanwha Investment & Securities, and HANWHA GENERAL INSURANCE, among other smaller financial stocks, have also seen a positive trend. Overall, Hanwha's financial affiliates have low trading volumes, but purchases through the ETF have boosted their stock prices.
An official from the asset management industry noted, 'As the representative stock prices within the ETF surged, the ETF's revenue increased. This influx of investment capital has, in turn, supported the stock prices of the included assets.' The increase in stock prices also leads to a growth in the fund sizes that invest in these assets, creating a virtuous cycle that is becoming evident in Hanwha Group stocks.
Although not as much as Hanwha Ocean or Hanwha Aerospace, which saw stock prices more than double, both Hanwha Life and Hanwha Investment & Securities have also risen by over 10% this year. Unlike Samsung Life Insurance and Samsung Securities, which announced robust shareholder return policies and saw stock price increases, Hanwha's financial firms have not yet disclosed concrete value-up plans, even though their stock prices have risen.
Another asset management company official said, 'When an ETF becomes popular, all the stocks in the basket tend to gain attention,' adding that 'the rebalancing effect can also be expected.' Rebalancing is the process of adjusting the proportions of investment assets held by the ETF, which performs regular rebalancing twice a year in June and December. If the prices of large stocks like Hanwha Aerospace and Hanwha Ocean continue to rise, the investment proportion of these assets in the ETF will increase, allowing a reduction in those assets and an increase in others.
As the scale of the ETF market increases, the phenomenon of group stocks moving together is likely to intensify. Due to the 'high mobility' characteristics of ETFs, which allow for easier entry and exit of investment capital and facilitate easy transactions in trading systems, when representative stocks show strength, capital quickly flows into related ETFs. Asset management firms are operating group stock ETFs that can evenly invest in affiliates such as Samsung, SK, Hyundai Motor, LG, and POSCO.