Securities Stocks Soar in a Bull Market, 'Record Highs Keep Coming'

KOSPI Surpasses 2400, Securities Stocks Rally
Increase in Individual Trading Volume, Expectations for Second Half Earnings

[Asia Economy Reporter Oh Ju-yeon] As the domestic stock market has risen for six consecutive trading days and surpassed the KOSPI 2400 level, securities stocks have soared in unison. This is interpreted as the stock prices reflecting early expectations of improved second-half earnings, as brokerage profits are expected to increase due to the rise in trading volume by individual investors.

According to the Korea Exchange on the 11th, the securities industry index rose 4.06% from the previous trading day to 1880.99 during the morning session, marking the highest level in the past year. Considering that the securities industry index had dropped to 935.66 in March when the novel coronavirus disease (COVID-19) spread rapidly, it has more than doubled (101.03%) in just five months.

This upward trend is the first since 2017-2018 when the KOSPI reached an all-time high. At that time, the securities industry index was 1495.32 in December 2016 and rose steadily throughout 2017 amid a booming domestic stock market, increasing by 67.26% to 2501.15 in January 2018.

This time, the rebound and additional rise following the unexpected variable of COVID-19 made the increase even more pronounced. Moreover, as the index surpassed the 2250 level, which was considered a resistance line for the "Boxpi" (KOSPI trapped in a box range), and jumped well beyond the 2300 level, some interpreted this as overcoming the variables that had limited the stock market rise so far or reflecting even more positive factors. When the KOSPI exceeded the 2400 level during the session, securities stocks showed strong gains across the board. Thanks to the so-called "Donghak Ants" (retail investors), securities firms that posted record-breaking quarterly earnings exceeding expectations in the second quarter are expected to deliver strong results in the third quarter as well.

According to financial information provider FnGuide, the operating profit consensus for five securities firms with estimates from three or more companies is expected to increase by an average of 49.9% year-on-year in the third quarter. Kiwoom Securities is expected to see operating profit rise about 98% year-on-year in the third quarter, following its record quarterly earnings in the second quarter. NH Investment & Securities is projected to increase by 55%, and Mirae Asset Daewoo by 42%. Korea Financial Group and Samsung Securities are also expected to see operating profits rise by 28% and 26%, respectively, compared to the same period last year.

The stock prices of securities firms, which rose following the surprise earnings announcement in the second quarter, continue to strengthen with expectations for third-quarter results. Kiwoom Securities closed up more than 10% during the previous trading day, hitting a 52-week high. On this day, it recorded 124,500 won, up 5.51% from the previous day, surpassing the previous day's high again. Park Hye-jin, a researcher at Daishin Securities, forecasted that Kiwoom Securities' brokerage commission revenue this year will increase by 111% year-on-year to 630 billion won. Park explained, "Excess liquidity will support the downside of earnings through brokerage commission revenue."

Mirae Asset Daewoo, expected to be the first securities firm to achieve operating profit of 1 trillion won this year by breaking its record for the largest second-quarter earnings, also hit new highs day after day. The stock price of Mirae Asset Daewoo, which was 8,020 won at the close on the 3rd, reached a new high of 9,930 won in the morning session on this day, rising 23.82% this month. Jeon Bae-seung, a researcher at eBest Investment & Securities, noted that Mirae Asset Daewoo's brokerage commission revenue in the second quarter increased by 31% compared to the previous quarter and mentioned that earnings improvement based on this is valid for the second half as well. In addition, Yuanta Securities, Eugene Investment & Securities, and Hyundai Motor Securities all hit 52-week highs on this day.

This content was produced with the assistance of AI translation services.