[Asia Exclusive] CEO Jeong Il-moon: "In a Volatile Market, KTB Securities Remains Relatively Stable"

Market Volatility Rises Due to Interest Rate Hikes
Hana Financial Investment Enhances Asset Management Expertise and Performance Through Collective Intelligence

Jung Il-moon, President of Korea Investment & Securities, is being interviewed by Asia Economy on the 20th. / Photo by Moon Ho-nam munonam@

[Asia Economy reporters Jeon Pil-su and Hwang Jun-ho] "The market has been pushed up by money. When money flows out, the market falls."

Jung Il-moon, CEO of Korea Investment & Securities, who has had a remarkable 33-year career in Yeouido starting as a securities firm employee and rising to president, recently diagnosed the market changes this way. The average daily total trading value in the stock market (KOSPI + KOSDAQ) was about 9.3 trillion KRW in 2019, around 23 trillion KRW last year, and nearly 30 trillion KRW this year. The trading value more than tripled in two years, so it is rather unusual that the stock market has not risen more than this. However, according to CEO Jung, if money flows out of the market due to factors such as the US tapering (asset purchase reduction) and South Korea’s base interest rate hikes, it is a natural course for the market to decline.

However, Korea Investment & Securities’ clients are expected to achieve relatively better returns even in such a market. CEO Jung said, "Our company’s clients have a relatively low investment proportion in domestic stocks," adding, "Even if the financial situation changes and the market declines, the impact is expected to be relatively small." Looking at the company’s total revenue for last year and the year before, it can be divided into IB 40%, investment (asset management) 40%, and retail 20%. Within the retail 20%, brokerage (commission trading) revenue accounts for 40%, which is about 8% of the total. However, with the stock market performing well this year, the proportion has increased to 12-13%. Still, this is a very low level compared to other securities firms, and brokerage proportions have been reduced by each team since the beginning of this year. Therefore, his analysis is that the impact from market changes will not be significant.

In particular, Korea Investment & Securities has proactively responded to such market changes by introducing a ‘team sales system’ this year. CEO Jung explained, "There are limits to having one private banker (PB) handle all aspects of customized asset management for clients, including financial markets, financial products, tax, and real estate consulting, as in the past," adding, "Since the first quarter, we have introduced a ‘team’ system with specialized personnel in each field, providing more advanced and higher-quality asset management services using collective intelligence." He continued, "We not only divided the work but also implemented a system that pays performance by team, distributing individual rewards according to contribution," adding, "Through this system, performance bonuses this year increased by 27% in Q1 and 15% in Q2 compared to last year."

CEO Jung is also focusing on expanding overseas business, considering the economic recovery after COVID-19. The recently issued 600 million KRW foreign currency bonds were capitalized last month in the Hong Kong and New York branches. There are plans to increase investments in Vietnam and Indonesia as well. Most of these funds will be used to strengthen IB and activate direct investments. He said, "There are no plans to issue additional foreign currency bonds this year, but as a regular issuer, we plan to issue foreign currency bonds at an appropriate time in the future to strengthen overseas business." Korea Investment & Securities operates eight overseas local corporations and two overseas offices.

Finally, CEO Jung cited ESG as one of the key projects this year, stating, "This year, we completed the establishment of the ESG Committee under the board of directors, and in April, we were selected as a new market maker supplying liquidity to the greenhouse gas emission trading market," adding, "We established the Carbon Solutions Department, which is responsible for carbon emission rights, and in the future, we plan not only to act as a simple liquidity supplier in the carbon emission rights market but also to actively promote businesses related to carbon emission rights."

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