Korea's high-dividend exchange-traded fund (ETF) market has entered an all-out competition ahead of the separate taxation system for dividend income taking effect next year. With Korea Investment Management, the country's third-largest asset manager, launching a new product, all nine top asset managers by net assets now have high-dividend lineups, and their differentiated strategies are becoming clearer as listed companies restructure their dividend policies.
Korea Investment Management will list the "ACE High Dividend" ETF on January 16, according to the financial investment industry on January 11. Shinhan Asset Management launched "SOL Korea High Dividend" in September, while Samsung Asset Management and NH-Amundi Asset Management are expanding market share through index restructuring and fee reductions. Mirae Asset Global Investments also accelerated its product lineup by adding "TIGER Korea Dividend Dow Jones."
As a latecomer, Korea Investment Management presented "disqualification filtering" as its core strategy. The approach excludes companies whose stock prices are slow to recover after ex-dividend dates, viewing them as lacking earnings strength. A prime example is Cheil Worldwide (030000.KS). Despite a dividend payout ratio exceeding 40 percent, its stock price rose only 12 percent from May to early last month, significantly underperforming the KOSPI's 65 percent gain over the same period.
As individual ETFs' selection criteria diverge, the overall market's strategic landscape is also clearly splitting. KB Asset Management raised Samsung Electronics' (005930.KS) weighting to 27 percent in its "RISE High Dividend" ETF, while Timefolio Asset Management's "TIMEFOLIO Korea Plus Dividend Active" ETF allocated more than 30 percent combined to Samsung Electronics and SK hynix (000660.KS), building a "tech-based high-dividend" portfolio. This contrasts with most high-dividend ETFs that increase weightings in traditional high-dividend stocks such as Hyundai Motor (005380.KS) and Kia (000270.KS), as well as financial and telecommunications sectors. Some asset managers are also preemptively increasing allocations to companies expected to meet separate taxation requirements next year, such as Hankook Tire & Technology and Hyundai Elevator, targeting policy changes.
Dividend announcements from listed companies are expected to accelerate over the next month. Key variables for market structure changes will be how much major companies like Samsung Electronics, Hyundai Motor, and Kia actually expand dividends, and how dividend policy normalization proceeds in traditional dividend sectors such as shipbuilding, refining, and power generation. "Since separate taxation will apply immediately to dividends next year, dividend announcements from late this year through early next year will be decisive for market strategy formulation," said Lee Kyung-soo, a researcher at Hana Securities. "We also need to prepare for the possibility that individual companies' dividend policies may change more drastically than in previous years."
Hana Securities estimated that 307 listed companies are expected to meet separate taxation requirements in early next year, including HD Hyundai Heavy Industries (329180.KS), Samsung Life Insurance (032830.KS), Samsung Fire & Marine Insurance (000810.KS), and DB Insurance (005830.KS). However, market attention is shifting to "large-cap stocks slightly below the threshold." This is because the lower the expectations, the greater the stock price reaction when dividend increases are announced. Samsung Electronics, Hyundai Motor, Kia, and KB Financial Group fall into this category.
The policy change also casts shadows. As domestic equity funds are excluded from this separate taxation, a structural "reverse discrimination" emerges where direct investment in the same stocks qualifies for separate taxation while indirect investment through funds and REITs remains subject to comprehensive taxation. This raises calls for improvement compared to major countries such as the United States and Japan, which apply separate taxation to fund dividends and capital gains and even allow loss offsetting. "If this system is maintained, concentration in individual stocks and market distortion could intensify," a senior industry official warned.