Brokerage stocks rose across the board even as the KOSPI turned lower during Wednesday's session. The sector is regarded as a prime beneficiary of expanding stock market trading volume, and expectations for strong second-quarter earnings are also supporting investor sentiment.
According to the Korea Exchange (KRX), the KOSPI was trading at 8,033.53 on Wednesday, down 54.81 points, or 0.68%, from the previous trading day. Brokerage stocks, by contrast, mostly continued their upward trend. NH Investment & Securities (005940.KS) was trading at 32,700 won, up 4.30% from the prior session, while Mirae Asset Securities (2.81%), Shinyoung Securities (2.92%), Korea Investment Holdings (2.27%), Samsung Securities (1.85%) and Kiwoom Securities (1.72%) also advanced.
Brokerage sector stocks have recently undergone a correction, with the KRX Securities Index falling more than 12% over the past month. Broadening the period to the entire second quarter, brokerage stocks were little changed while the KOSPI rose more than 60%. Analysts attribute this to funds concentrating in a handful of large-cap stocks such as semiconductors as the index set record highs, along with concerns that the growth in trading volume may be passing its peak, which weighed on investor sentiment toward brokerage stocks.
Still, expectations for brokerages' second-quarter earnings are considered valid. The average daily trading value on the domestic stock market last month was 99.4 trillion won, down 6.4% from the previous month. However, the second-quarter average daily trading value stood at 90 trillion won, up 35.1% from the previous quarter, setting a record high. Improvement in brokerage profit and gains from valuation and disposal based on firm risk-asset prices remain intact, according to analysts.
Seol Yong-jin, an analyst at iM Securities, forecast that the brokerage sector's combined operating profit for the second quarter this year would reach 3.9 trillion won, up 126% from the same period last year and exceeding market consensus. "Considering solid earnings and the easing of valuation burden stemming from the sector being sidelined in the market, there is ample possibility that the brokerage sector will draw attention again in a phase where the extreme concentration eases," Seol said. "As stock price corrections occurred in large numbers in connection with the semiconductor concentration, the overall valuation burden has been resolved."
