[Into the Stocks] Kiwoom Securities Collapses as Individual Investors Leave

8 Consecutive Trading Days of Decline
52-Week Low Again Today Following Yesterday
Operating Profit Down 78% Due to Market Deterioration
Fee Revenue Also Declines as Individuals Leave

[Asia Economy Reporter Kwon Jae-hee] Kiwoom Securities, which recorded record-breaking performance in recent years thanks to individual investors' ‘Donghak Ant Movement,’ is struggling with poor results. This is due to reduced operating income amid worsening market conditions and a decline in brokerage (commission income) as individual investors leave the market due to interest rate hikes and other factors.

As of 9:27 a.m. on the 12th, Kiwoom Securities was trading at 83,800 KRW, down 2.33% from the previous trading day. Kiwoom Securities, which had been on a downward trend for eight consecutive trading days, hit a 52-week low of 85,800 KRW during the previous day’s session and broke that low again on this day.

Kiwoom Securities announced operating profit of 213.2 billion KRW for the first quarter on the 10th, a 38.6% decrease compared to the previous year. The actual poor performance, which was expected to be weak, appears to have led to further declines.

The critical factor behind Kiwoom Securities’ poor performance was the reduction in operating income due to deteriorating market conditions. Due to increased volatility in the financial market, Kiwoom Securities’ operating income for the first quarter was 4 billion KRW, a 78% decrease compared to the previous quarter.

Eun Kyung-wan, a researcher at Meritz Securities, analyzed, "Considering the relatively small bond holdings compared to other companies and the low proportion of ELS self-hedging, this is a disappointing result."

Also, since Kiwoom Securities holds a 30% market share in individual investor brokerage, the gap left by departing individual investors was significant. Domestic stock brokerage revenue for the first quarter was 83.8 billion KRW, down 20.1% from the previous quarter. However, the decline in domestic stock brokerage was somewhat offset by a 16.3% increase in derivatives. Corporate finance fees also decreased by 19% from the previous quarter due to reduced income from structured and PF financial advisory services.

The outlook for next year is not bright either. Korea Investment & Securities has lowered its operating net income estimates for Kiwoom Securities by 11% and 15% for this year and next year, respectively.

Accordingly, the securities industry has lowered its expectations for Kiwoom Securities. Samsung Securities cut Kiwoom Securities’ target price from 135,000 KRW to 120,000 KRW, Meritz Securities lowered it from 115,000 KRW to 110,000 KRW, and Daishin Securities also reduced it from 140,000 KRW to 115,000 KRW.

Jung Min-ki, a researcher at Samsung Securities, predicted, "Until macro uncertainties are completely resolved, indicators of individual investor activity such as trading volume and credit balance will continue to decline, which will have a key impact on Kiwoom Securities’ investor sentiment."

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