By Jhoo Dong-chan
The nation's major brokerages enjoyed record high earnings in the first half of the year on the back of strong performances in investment banking (IB) and ample stock trading volume.
However, market analysts said they are unlikely to maintain such growth momentum in the second half due to growing market uncertainties.
According to regulatory filings submitted to the Financial Supervisory Service, the nation's largest securities firm Mirae Asset Daewoo with total assets of more than 8 trillion won ($7.14 billion) saw a 357.8 billion won net profit in the first half, up 30.7 percent from a year ago.
It was also the highest among the nation's brokerages in the period.
Mirae Asset also posted 7.26 trillion won in sales while its operating profit reached 427.6 billion won.
"Its high return on equity (ROE) and solid sales in overseas sectors led Mirae Asset's strong earnings," said a Mirae Asset Daewoo official, noting its overseas sales accounted for 27 percent of the brokerage's total sales in the first half.
Other major brokerages such as NH Investment & Securities and Samsung Securities also posted double-digit growth in net profit as each saw a 25.4 percent and an 89.8 percent growth in earnings.
Korea Investment & Securities posted 'only' a 6.2 percent growth in net profit year-on-year to 287.3 billion won in the first half, but the brokerage's ROE stood at 13.2 percent during the period.
This was the first time for a major brokerage here with assets of more than 3 trillion won to post an ROE higher than 13 percent.
"Korea Investment & Securities' solid ROE is attributed to its successful earnings in the Southeast Asian market. The market is considered to be the brokerage's next growth engine for the future," said a Korea Investment & Securities official.
Market observers said, however, it won't be easy for the nation's brokerages to maintain the momentum in the second half this year.
"Due to mounting economic uncertainties raised because of the ongoing trade dispute between the U.S and China, desire for investment has quickly cooled off," said Daishin Securities Research & Strategy Center researcher John Park.
"Expectations are still there as the U.S. and China are in talks to settle the dispute. However, the Tukish lira crisis and downturn in emerging blocs could be another negative factor in the second half."
Reflecting gloomy outlooks on earnings of securities firms, shares of the nation's brokerages declined up to 30 percent compared to their peak in June.
Shares of Kiwoom Securities, which peaked at 125,000 won on June 1, have declined over 30 percent to the 85,000-won level in August.
Shares of NH and Mirae Asset also suffered more than 15 percent decline in the period, supporting the negative outlook on brokerage shares.
"The nation's brokerage shares will be determined by the future development of the Seoul bourse," said Yuanta Securities analyst Chung Joon-seop.
"I believe skepticism has fully reflected in their share prices. If they surprise investors with higher-than-expected earnings in the second half, it would be a good bet investing in brokerage shares."
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