Korean brokerages awash with cash

Korean securities companies have ample cash reserves as they struggle to secure liquidity amid the eurozone debt crisis and a protracted economic slowdown, data showed Friday.

According to the data by the Financial Supervisory Service, 62 local brokerage houses had a combined 55.4 trillion won ($49.3 billion) in cash as of the end of June, up 26 percent from a year earlier.

Tongyang Securities Co. held the highest amount of cash with 6.7 trillion won, followed by KDB Daewoo Securities Co. with 6.4 trillion won, the data showed.

The surge in brokerages' cash reserves comes as an economic slowdown stemming from the eurozone fiscal crisis has cast clouds on the future performance of the stock market.

In August, the daily trading volume of the local bourse nosedived 46 percent on-year to 4.3 trillion won, hurting securities companies' earnings as they rely heavily on commission income.

Market watchers, however, said brokerages' rush to secure cash will likely lose intensity in the coming months on signs of global economic uncertainty easing.

"The tendency to have ample cash on hand is expected to die down, helped by U.S. economic stimulus measures and Europe's efforts to solve its debt crisis," said Jason Park, an analyst at IBK Investment & Securities Co.

Earlier this month, the European Central Bank announced an unlimited government debt purchasing plan, while the U.S. Federal Reserve recently pledged to inject $40 billion monthly to purchase mortgage-backed securities to revitalize the economy. (Yonhap)