Korea's brokerages are raking it in. Their stocks aren't.

Seoul's financial district of Yeouido / Korea Times file

Korean brokerage stocks should be having their moment as trading booms, earnings head for another record and the broader market rallies. Instead, investors are chasing semiconductor shares and questioning whether trading value has already peaked, leaving brokerages stuck on the sidelines.

According to the Korea Exchange (KRX) on Friday, the KRX Securities Index jumped 59.82 percent in the first quarter, outperforming both KOSPI and the KRX Semiconductor Index, which gained 40.65 percent.

The rally has since faded. Since April, the securities gauge has trailed the broader market, falling 10.69 percent in the second quarter. The KRX Semiconductor Index, by contrast, has surged 100.36 percent.

The weakness contrasts with robust trading activity.

Average daily trading value on the KOSPI and Kosdaq reached 90 trillion won ($58.4 billion) in the second quarter, up 35.1 percent from the previous quarter and a record high, according to Samsung Securities.

In June, as KOSPI climbed above 9,000, monthly turnover reached 313 percent, surpassing the previous peak of 310 percent set in January 2021 during the pandemic-era liquidity boom.

Analysts say the sector's underperformance reflects investors' preference for large-cap semiconductor stocks, where much of the market's liquidity has been concentrated.

Concerns that trading value may have peaked are adding pressure. After a sharp increase in average daily trading value in the first half, investors are questioning whether that growth can continue in the second half.

"Looking toward the second half, trading value remains high in absolute terms, but quarter-on-quarter growth is expected to slow," said Jang Young-im, an analyst at SK Securities.

Still, analysts say the recent underperformance in brokerage shares appears overdone given the sector's business conditions and earnings trajectory.

The country's five largest brokerages are expected to report another record combined operating profit for the second quarter. The consensus estimate for Mirae Asset Securities, Korea Investment Holdings, Samsung Securities, NH Investment & Securities and Kiwoom Securities stands at 4.2 trillion won, up 140 percent from a year earlier, according to FnGuide.

Continued growth in the exchange-traded fund (ETF) market is expected to help cushion the impact of slower gains in trading value. Average daily trading value on the KRX and Nextrade edged down to 102 trillion won in June from 106.2 trillion won in May. Including ETFs, however, the figure rose to 140.7 trillion won from 136.6 trillion won, according to SK Securities.

Policy momentum could also provide support in the second half. Financial authorities are seeking to allow foreign investors using omnibus accounts to invest in domestic ETFs, while plans to revitalize the Kosdaq market are expected to take shape later this year.

"There may be little that brokerage stocks can do about being left behind in a semiconductor-led market," Jang said. "But if sector rotation emerges, it may be time to take another look at the sector."