[Click e Stocks] Depressed Securities Firms... Still Recommending Buys

[Asia Economy Reporter Junho Hwang] Kyobo Securities on the 19th lowered the target stock prices, anticipating that the operating profits of the five major securities firms?Mirae Asset Securities, NH Investment & Securities, Korea Financial Group, Samsung Securities, and Kiwoom Securities?for the third quarter of this year will decrease by 66.0% compared to the previous year. However, they advised that expanding the weighting of securities stocks requires careful consideration.

The average daily trading volume for the third quarter of this year is about 13.8 trillion KRW, which is expected to lead to a decline in performance as it decreased by 19.7% and 47.3% compared to the previous quarter and the same period last year, respectively. Additionally, due to the big steps taken by the US and Bank of Korea in September, causing a sharp rise in market interest rates, securities firms also experienced increased valuation losses on proprietary trading-related managed assets. With increased volatility in the financial markets, investment sentiment related to asset management has worsened, leading to an overall expected decrease in related earnings.

Ji-young Kim, a researcher at Kyobo Securities, said, "Despite the downward revision of earnings, we maintain an investment opinion of 'Overweight' on the securities industry," adding, "This is because the capital strength of securities firms has improved both qualitatively and quantitatively compared to the past, and the domestic securities firms' performance next year is expected to be no worse than during previous economic crises." She continued, "Considering the completion of government stimulus policies and concerns about economic recession, it is judged that approaching the securities industry from a trading perspective is valid for the time being. As we move into the second half of this year, we recommend a buying strategy based on long-term undervaluation and expectations for recovery in the securities industry."

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