Middle East Risks Grow: Four Major Banks' Bad Loans Surpass 5 Trillion Won

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an AI-based customized news recommendation and summary service developed with support from the Korea Press Foundation. It provides six curated news articles tailored to each reader type.

1. Retail Investors Sell 14.8 Trillion Won This Month, Set to Break Monthly Record

- Key Summary: As the KOSPI surged 28.17% this month, repeatedly setting all-time highs, individual investors net sold 14.77 trillion won through the 24th of this month, making a new monthly net selling record highly likely. This contrasts with foreign investors and institutional investors, who net purchased 2.53 trillion won and 6.94 trillion won, respectively, during the same period. Some 62% of retail net selling was concentrated in two stocks: Samsung Electronics (005930) at 6.58 trillion won and SK hynix (000660) at 2.50 trillion won, with Doosan Enerbility (034020), Samsung SDI (006400), and Hyundai Rotem (064350) also ranking among the top net-sold stocks. Meanwhile, margin loan balances, a gauge of leveraged investing, stood at an all-time high of 35.08 trillion won as of the 23rd.

2. Banks' Delinquency Response Capacity Weakens as Corporate Distress Spreads to Finance

- Key Summary: The simple average NPL coverage ratio of the four major commercial banks fell 18.2 percentage points from 172.0% at the end of last year to 153.8% at the end of the first quarter this year. Provisions were little changed at 7.78 trillion won, down 3 billion won (0.03%) from the previous quarter, while NPLs surged 527.6 billion won (11.6%). In particular, delinquency rates on small and medium-sized enterprise (SME) loans in the construction sector at Shinhan Bank and Hana Bank stood at 1.02% and 1.44%, respectively, double the SME averages of 0.46% and 0.61%. Meanwhile, JPMorgan and Citibank project that the Bank of Korea will raise the base rate by 0.25 percentage points each in July and October to 3%, raising concerns about additional distress among vulnerable borrowers.

3. Middle East Risks Grow: Four Major Banks' Bad Loans Surpass 5 Trillion Won

- Key Summary: Amid the fallout from high oil prices and high interest rates caused by the prolonged U.S.-Iran war, the NPL balances of the four major banks — KB Kookmin, Shinhan, Hana, and Woori — stood at 5.08 trillion won as of the end of March this year. This marks an 11.6% increase from 4.55 trillion won at the end of last year, and the first time since 2018 (6.05 trillion won) — eight years ago — that first-quarter NPLs have surpassed 5 trillion won. As vulnerable borrowers, including SMEs and self-employed individuals, rapidly turn delinquent, overdue loans from SMEs and the self-employed swelled by about 486 billion won to 3.02 trillion won as of the end of March. In addition, yields on three- and 10-year government bonds have risen about 0.5 percentage points from the end of last year, amplifying concerns about expanding distress as market rates climb.

4. Money Pours into Humanoid ETFs, but Korea Lags as U.S. Thrives

- Key Summary: Total net assets of domestically listed humanoid-themed ETFs surged 70% in about four months, from 2.15 trillion won at the end of last year to 3.67 trillion won as of April 23 this year. However, performance gaps between domestic ETFs and U.S./global ETFs have become stark. HANARO K Humanoid Theme TOP10 posted a cumulative return of -15.57% since inception, while TIGER Korea Humanoid Robot Industry and RISE AI & Robot also underperformed with three-month returns of -10.55% and -11.78%, respectively. In contrast, RISE U.S. Humanoid Robot posted a three-month return of 12.42%, a strong performance analysts attribute to its high weightings in companies with confirmed earnings improvements, such as Teradyne, Intuitive Surgical, and Rockwell Automation.

5. No Fees and Easy MTS: Online Brokerages Become 'Disruptors' in Domestic Stock Trading

- Key Summary: In the first quarter of this year, individual investors' trading volume in the KOSPI, KOSDAQ, and KONEX markets reached 3,347.43 trillion won, 2.26 times the 1,477.10 trillion won recorded in the same period last year. Among them, Toss Securities' domestic stock trading volume increased sevenfold, far exceeding the overall market's growth rate. Kakao Pay Securities' monthly active users (MAU) reached 4.02 million in March, up 10.14% from January, and its domestic stock assets surged 94% in three months to 6.53 trillion won in the first quarter. Meanwhile, cumulative balances in Returning Investment Accounts (RIA), introduced last month, surpassed 1 trillion won just one month after launch, laying the groundwork for overseas stock funds to return to the domestic market.

6. DS and Other Latecomer Asset Managers Launch Push into ETF Niche Markets

- Key Summary: DS Asset Management is preparing to launch a KOSDAQ active ETF product targeting a June-July release this year, while Brain Asset Management and Daol Asset Management are conducting market research for their first ETF launches. Life Asset Management, which focuses on hedge funds, is also considering medium- to long-term market entry through conversion to public offerings, and Midas Asset, Yuri, and Truston Asset Management are weighing additional product launches. These moves by latecomers come as inflows continue into KOSDAQ active ETFs and as discussions gain momentum to abolish the "correlation coefficient 0.7" regulation that had restricted the management flexibility of active ETFs. Given that only one new asset manager entered the ETF market last year, the asset manager base is expected to expand significantly starting this year.