Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
Kiwoom fails to jump on market uptrend
The Kiwoom Securities head office on Yeouido, Seoul
By Jhoo Dong-chan
By Jhoo Dong-chan
Seoul stocks have been stalling in a narrow range, but domestic brokerages are expected to enjoy higher-than-anticipated earnings in the second quarter thanks to expectations the Bank of Korea (BOK) will cut its policy rate in the third quarter.
Observers have produced a series of rosy outlooks for domestic brokerages, citing about half of their entire assets are in corporate bonds, but Kiwoom Securities is failing to follow the market uptrend because of its heavy dependence on retail investment.
According to online marker researcher FnGuide, Kiwoom Securities is expected to post a 177.9 billion won ($153.5 million) in net profit in June, down 1.88 percent from the previous month market consensus.
The brokerage's heavy dependence on its retail investment is the reason behind its adjusted outlook. Other securities firms have constantly stretched their business portfolio, especially in investment banking (IB) sector.
The nation's big five brokerages, including Mirae Asset Daewoo, said their earnings from retail sector accounted for about 22.5 percent in the first quarter of the year.
In contrast, Kiwoom Securities depended nearly 90 percent of its entire earnings on retail sector in 2015. The brokerage has made it utmost to diversify its portfolio, but yet to reduce the figure below the 40 percent level.
“Kiwoom Securities attracted a great number of customers in a short period of time thanks to its differentiated mobile trading system,” said a major securities firm official who asked not to be named.
“I understand Kiwoom has done its best to stretch its revenue portfolio over the past several years, but it will take some time to produce a result. Also, Kiwoom do not own bond assets as much as its rivals in the market. This was one of the major reasons the brokerage failed to jump on the market uptrend.”
When interest rates fall, bond prices move up since investors tend to look for alternative investment sources if banks do not offer satisfying returns.
Kiwoom Securities CEO Lee Hyun said in his New Year address that he and the company will do their best to diversify its business and asset portfolio throughout the year.
Kiwoom had led a consortium to establish an internet-only bank, but the financial authorities rejected the brokerage's proposal because the government said the proposal wasn't economically viable and innovative enough.