Brokerage sector swamped in the doldrums
Korea's securities brokerage industry has been a big underperformer for the past year, buffeted by the resurfacing of the European debt crisis and other negative factors, data showed Sunday.
The return on the brokerage sector's subindex stood at minus 30.6 percent during the past year, the third worst record after minus 32.6 percent for medical and precision machines and minus 31.9 percent for chemicals, according to the data by the Korea Exchange, the local bourse operator.
In addition, the yield on the brokerage subindex has been underperforming that of the benchmark Korea Composite Stock Price Index (KOSPI) for the third consecutive week.
As of Friday, the return on the brokerage subindex was down 2.25 percent from a week earlier, while the key index increased 0.06 percent over the cited period.
Market watchers said the securities brokerage industry has been pummeled by the persistent European fiscal crisis, which has prompted many investors to exit the stock market.
In May, European funds accounted for 72.4 percent of all money that left South Korea amid mounting market jitters over a possible Greek exit from the eurozone, according to government data.
British and other European funds unloaded shares worth 2.38 trillion won (US$2.03 billion) in the first 21 days of May. Overall, foreign investors withdrew a net 3.29 trillion won in funds during the same period, according to the data by the Financial Supervisory Service.
The watchers said the brokerage sector has also been hit by a fall in the stock market turnover and the parliament's axing of a revised capital market law, which has hindered securities firms from breaking into new business areas.
In February, lawmakers decided not to deliberate a revision bill to the Financial Investment Services and Capital Market Act, which would have allowed the establishment of large homegrown investment banks. (Yonhap)