South Korea’s brokerage industry has seen robust gains in share prices, driven largely by higher earnings supported by increased trading activity amid the ongoing stock market rally.
The KRX Securities Index, a basket tracking major brokerage firms, has surged 100.4 percent year-to-date as of daytime trading's close on Friday, marking the strongest gain among major sector indices, according to the Korea Exchange.
The rise was nearly double that of the second-best performer, the KRX Semiconductor Index, which climbed 51.09 percent over the same period, respectively.
Among individual stocks, Mirae Asset Securities took the top spot, rising 203.63 percent, while SK Securities and Korea Investment Holdings advanced 190.67 percent and 80.89 percent, respectively. NH Investment & Securities, Kiwoom Securities and Daishin Securities have also extended their solid upward momentum.
Brokerage houses are widely seen as key beneficiaries of a buoyant stock market, as increased trading in equities, derivatives and exchange-traded funds translates into higher commission revenue.
Firms posted record-high earnings last year, with Korea Investment & Securities, Mirae Asset Securities, Kiwoom Securities, NH Investment & Securities, Samsung Securities, and KB Securities all setting new profit records.
Backed by the rally, Mirae Asset Securities’ market capitalization climbed to 40.21 trillion won ($27.7 billion) as of closing, surpassing Hana Financial Group at 36.54 trillion won.
Having already overtaken Woori Financial Group earlier, it now trails only KB Financial Group and Shinhan Financial Group among local financial holding companies, whose market cap stands at 62.93 trillion won and 49.52 trillion won, respectively.
The market-cap trend underscores the strong standing of brokerage stocks. While banking groups typically post annual net profits ranging from 3-6 trillion won, Mirae Asset earned just over 1.5 trillion won and Korea Financial Group 2 trillion won last year.
Kim Jae-woo, an analyst at Samsung Securities, said key market indicators show unprecedented strength of brokerage firms, with investor deposits surpassing 100 trillion won and average daily trading value exceeding 60 trillion won.
“Against this backdrop, valuations of brokerage firms are entering a new territory,” Kim said. “With money flowing into the stock market, brokerage stocks clearly stand to benefit.”
silverstar@heraldcorp.com
