Brokerage stocks, which had recently underperformed, rebounded on the back of the KOSPI's recovery of the 8,000-point mark.
According to the Korea Exchange (KRX) on Thursday, the sector that gained the most the previous day was semiconductors (+8.96%), followed by brokerages (+6.97%). Samsung Securities (016360.KS) (+10.38%), NH Investment & Securities (005940.KS) (+8.46%), Shinyoung Securities (+7.47%), and Korea Investment Holdings (+7.32%) all outpaced the KOSPI's gain (+5.76%).
Interest in brokerage stocks, which had continued to slump recently, appears to be reviving with the KOSPI's recovery of the 8,000-point level as a turning point. Earlier this year, brokerage stocks showed strength. As the KOSPI rose and average daily trading value increased, investor sentiment toward brokerage stocks improved.
In fact, the KRX Securities index rose 59.82% in the first quarter, the second-highest gain among all KRX indices. This far exceeded the KRX Semiconductor index's gain (40.65%) over the same period.
However, brokerage stocks headed downhill from the second quarter. From April to June this year, even as the KRX Semiconductor index (100.36%) surged on strength in Samsung Electronics and SK hynix and favorable trading value continued, the KRX Securities index fell 10.69%. It dropped 14.99% last month alone.
The underperformance of brokerage stocks despite the surge in trading value is attributed to market flows being concentrated in large-cap semiconductor stocks. While rising indices and increasing trading value are typically favorable for brokerage earnings, the prevailing analysis is that brokerage stocks were sidelined as investor attention concentrated on specific leading stocks. According to SK Securities, brokerage stocks also showed weakness during the 2011 market rally centered on autos, chemicals, and refining.
Experts view the recent underperformance of brokerage stocks as excessive relative to industry conditions and earnings trends. While there is a possibility of a slowdown in the trading value growth rate, the absolute level of trading value remains high. According to SK Securities, average daily trading value in the second quarter reached 117.6 trillion won including exchange-traded funds (ETFs). In May and June, average daily trading value including ETFs increased from 137 trillion won to the 140 trillion won range. This means an environment favorable to brokerages' brokerage revenue continues.
In addition, with ETF growth continuing and policy expectations remaining for the second half, analysts say increasing exposure to brokerage stocks remains valid. Last month, trading value at the KRX and Nextrade (NXT) declined slightly from the previous month, but single-stock leverage ETFs for Samsung Electronics and SK hynix, which have drawn intense investor attention, were launched and boosted trading value. Average daily trading value including ETFs increased into the 140 trillion won range, sharply increasing overall trading value.
Financial authorities are pursuing a plan to expand the eligible investment targets of foreign omnibus accounts to include domestic ETFs and ETNs. Policies to invigorate the KOSDAQ market are also expected to take concrete shape, raising expectations that trading value currently concentrated in large-cap KOSPI semiconductor stocks could spread across the broader market.
The brokerage community maintains the view that investment exposure should be increased. Jang Young-im, an analyst at SK Securities, said, "There are factors that can offset peak-out concerns, such as ETF growth and policy expectations for the second half." She added, "The brokerage segment should be maintained as basic fundamentals, while investors should approach with a focus on stocks holding portfolios in areas such as wealth management and asset management, which are expected to benefit most from the unprecedented strength in the stock market."
