Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Securities firms eye overseas markets amid stock market slump
A panoramic view of Korea's financial hub in Yeouido in Seoul / Yonhap
By Lee Min-hyung
By Lee Min-hyung
Local securities firms are moving to expand their footing overseas, in a desperate bid to make up for declining earnings in the domestic market, which has been experiencing continuing bearish sentiment.
According to data from market tracker FnGuide, Korea's top six securities firms ― including Mirae Asset Securities and Samsung Securities ― are forecast to have generated combined net profits of 941.5 billion won ($661 million) in the third quarter, down 52.9 percent from a year earlier when they chalked up more than 2.3 trillion won in total net profits.
This decline was prompted by the U.S. Federal Reserve's unprecedented set of aggressive rate hikes throughout this year when it raised the near-zero benchmark rate to four percent. Hit hard by macroeconomic uncertainties overseas and a lackluster U.S. stock market, Korean shares also lost steam from last year's robust rally and the country's benchmark index ended up returning all the gains made during the pandemic.
Securities firms took a serious beating from the year-long market doldrums amid a steep fall in their brokerage commissions.
Industry officials said they are focusing on finding the next revenue streams in overseas markets particularly in Southeast Asia.
“A number of securities firms are expanding their presence in Vietnam and Indonesia, as initial market responses from the two countries appear promising,” an official at a major brokerage house here said.
“Korean securities firms hold expertise in mobile trading systems and digital technologies, so many of them expect fresh revenue streams from the two emerging markets by exporting the digital systems and attracting their user bases there,” the official said.
According to business reports from local brokerage houses, KB Securities generated a net profit of 8.2 billion won in Vietnam in the first half of 2022, the largest among those which tapped into the country. Korea Investment & Securities came in second with a net profit of 3.45 billion won during the same period.
Other major securities firms are also looking for new opportunities not just in emerging Asian countries, but in the United States and Europe as well.
NH Investment & Securities CEO Chung Young-chae visited the U.S. and the United Kingdom in September to sign a partnership with an investment research firm there and enhance networks with global institutional investors.