The cause of the "abnormal surge and plunge" in which Samsung Fire & Marine Insurance shares, which had jumped more than 28% just before the close on the 11th, plunged on the 12th and returned to normal, turned out to be exchange-traded fund (ETF) rebalancing (redistribution). Two ETFs from Samsung Asset Management newly added Samsung Fire & Marine Insurance the previous day, sending the stock price abnormally higher during the process, and the ETFs are believed to have incurred large losses in the process.
According to the industry on the 12th, Samsung Asset Management conducted "rebalancing" on the 11th just before the market close by newly adding Samsung Fire & Marine Insurance to the KODEX Financial High Dividend TOP10 and KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETFs and increasing its weighting.
The KODEX Financial High Dividend TOP10 ETF, with 204.6 billion won in assets under management (AUM), added Samsung Fire & Marine Insurance at 10.72%, and the KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF, with 517.1 billion won in AUM, added it at 8.98%. With the two products' combined AUM in the 720 billion won range, the purchase of Samsung Fire & Marine Insurance shares is estimated at around 68 billion won.
Although the scale of stock purchases by these ETFs was minimal considering the market capitalization (22 trillion won), external factors such as overlapping futures and options expiration caused an unusual spike in the share price.
As a rule, when managers add a new stock to an ETF portfolio, they avoid intraday trades to prevent affecting prices. Samsung Asset Management also bought shares during the call auction at the time of this rebalancing, but multiple factors appear to have combined to push the share price higher.
In the case of Samsung Fire & Marine Insurance the previous day, buy orders were smaller than sell orders, and because the rebalancing took place on the December futures and options expiration date, the price move was larger. The share price, which had been moving around 500,000 won recently, spiked to as high as 630,000 won late on the 11th.
The abnormally surging share price returned to normal on the 12th, just one day later. Accordingly, the two ETFs that newly added Samsung Fire & Marine Insurance are presumed to have suffered losses. While other ETFs investing in financial high-dividend stocks are rising as the KOSPI index climbs on the 12th, the KODEX Financial High Dividend TOP10 ETF and the KODEX Financial High Dividend TOP10 Target Weekly Covered Call ETF are each down around 2%.
Samsung Asset Management said the addition of Samsung Fire & Marine Insurance this time was decided according to rebalancing of the index it tracks. The two ETFs track as their underlying index the KOSPI 200 Financial High Dividend TOP 10 index created by the Korea Exchange (KRX), and as Korea Investment Holdings was recently removed from this index and Samsung Fire & Marine Insurance was added, the rebalancing was carried out.
As the stock price surged and plunged, losses also mounted for individual investors. On the Samsung Fire & Marine Insurance discussion board, investors posted comments such as, "It feels like the manager takes the big loss and investors are left to eat the loss," "Does it make sense to buy Samsung Fire & Marine Insurance at the upper limit?" and "I filed a complaint with the Financial Supervisory Service."