Heated stock market to bolster Korean brokerages’ bottom line, stock prices

The Korean securities category is expected to benefit from the heated stock market, lifting stock price and bottom-line outlook.

Shares of Korean top securities firm Mirae Asset Daewoo jumped 12.5 percent in the first three days this month and those of NH Investment & Securities up 12 percent and Kiwoom Securities 17.9 percent.

Korea Investment Holdings, the holding entity of Korea Investment & Securities, and Samsung Securities also gained 9.1 percent and 12.5 percent, respectively, over the period.

They turned lower over the following days in a correction, but outlook remains robust.

Market analysts expect brokerage business would be buoyed by surge in stock trade. Trade turnover on the main Kospi bourse hit a record high of 17 trillion won ($13.9 billion) on Wednesday when it finished up 2.87 percent to 2,147.00, returning almost to the pre-COVID-19 level.

Ample liquidity has flooded into the stock market after banking rates hardly yield any returns after the Bank of Korea pushed the base rate to fresh historic low of 0.50 percent.

The securities firms are projected to continue to make profits even if the stock transactions peak in the current quarter, as they are expected to receive more asset management fees amid increased money inflow to funds. Yuanta Securities said the outstanding balance of local funds rebounded in April.

Park Hye-jin, an analyst from Daishin Securities, said the brokerages recorded improved earnings in all sectors except for investment product management in the first quarter, but they would make profits even in the investment product management sector in the second quarter. Therefore, their overall earnings would significantly improve, he added.

Daishin Securities estimated the combined net profit of Mirae Asset Daewoo, NH Investment & Securities, Kiwoom Securities, Samsung Securities and Korea Investment Holdings to reach 732.4 billion won in the April-June period. The figure is 16 percent higher than market consensus.

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