Securities firms face heightened rivalry for new customers amid battery investment hype

The Korea Times

The Korea Times

Finance

Wed, November 29, 2023 | 01:35

Markets

Securities firms face heightened rivalry for new customers amid battery investment hype

Posted : 2023-08-06 15:55

Updated : 2023-08-07 15:38

Dealers stare at a computer screen at a dealing room of Hana Bank's headquarters in Seoul, Aug. 3. Yonhap

By Lee Min-hyung

Brokerage houses are intensifying competition to attract new retail investors amid reviving stock sentiment driven by unprecedented hype over secondary battery shares.

Securities firms' stock trading commission is forecast to have sharply risen in July, as more investors jumped into a frenzied buying and selling spree of some battery stocks, data showed.

According to the financial industry, the average daily users of five major brokerage houses ― Mirae Asset Securities, Korea Investment & Securities, KB Securities, Samsung Securities and NH Investment & Securities ― came in at 860,000 last month alone. This is an increase of 12 percent from a month earlier.

Investors focused on purchasing some battery shares during the same period, in an apparent move to accomplish short-term returns by joining the buying spree of some popular battery shares. They include EcoPro and POSCO Holdings.

Other data also showed that their transaction volume has been rising steeply in recent weeks. Last month, the accumulated transaction volume of EcoPro shares reached 26.3 trillion won ($20 billion), up more than 2.4 times from a month ago. EcoPro BM also achieved six-fold growth in transaction volume during the same period.

In response, securities firms are holding a series of promotional activities to attract more investors, so that they can maximize their returns from retail businesses amid the lackluster recovery of other conventional revenue areas such as real estate project financing.

NH Investment & Securities has recently started a special event for retail investors who transfer their stocks from other brokerage houses to the NH affiliate. They can receive financial benefits worth up to 1.15 million won for doing so, according to the company.

Kiwoom Securities has also launched a promotional event for two months from Aug. 1, targeting new customers. Those who open a new stock account by using the firm's mobile trading system can enjoy the benefits of receiving one random Korean stock and a decimal point of a U.S. stock. The company also holds a similar event for those who transfer their stocks from other brokerages to Kiwoom, offering a cash benefit of up to 1.15 million won for them.

In July, the average daily transaction volume in the benchmark KOSPI and secondary Kosdaq surpassed 27 trillion won for the first time in almost two years since August 2021. This, however, is causing alarm bells to ring for securities firms, prompting them to tighten their risk management during this period of extreme volatility in the local stock market.

"Some brokerage houses do not allow investors to engage in credit transactions on certain themed stocks such as those in the secondary battery industry, as part of their risk management, thereby allowing them to deal with frenzied investment regarding some shares that display high volatility," an industry source said. "More companies may follow in the same footstep if the shares continue to expand volatile ups and downs for more weeks to come."

mhlee@koreatimes.co.kr