J.P. Morgan On Upcoming Dividend Outflows

The US bank weighs in on the dividend flow outlook for Korean shares, which is highly concentrated in April.

J.P. Morgan: "South Korea’s dividend season follows the KOSPI2 index and is highly concentrated in Apr, though quarterly payments also show up in May, Aug and Nov. Apr accounts for 70% of all dividends - the largest single month concentration across Asia - and total typically 1.6% GDP with an Apr peak of 12% GDP annualized.
Foreign participation has fallen with the down turn in chips, easing from the 2019 high of 34% to 28% currently. Korea’s monthly BOP data also suggests around half these dividend payments are re-cycled back into local equities historically.

The impact on FX performance is quite consistent as a result, with potential outflows of 4% before re-investments in Apr.

The top three dividend payers in 2023 were Samsung, SK Hynix, Shinhan Financial Group, accounting for 28% of all dividends paid vs a combined index weight of 27%.
The more cyclical nature of these firms - particularly related to chips - means dividend growth correlates highly with Nominal GDP growth (R2 of 59%).

Samsung’s outsized proportion at 21% of the index means dividends are a somewhat meaningful 0.4% GDP. This has partly motivated a shift from semi-annual to quarterly payments in 2017, across Apr, May, Aug, Nov. SK Hynix also made a similar shift in 2022. Samsung also paid a large special dividend in 2021, but this is likely to be an idiosyncratic one-off situation."