By Lee Kyung-min
Korean securities firms are speeding up efforts to expand overseas business amid deteriorating profit margins here.
The move comes as their globalization efforts have started to bear fruit with many of their overseas operations making sizable profits, contributing to the growth of their balance sheets.
According to data from the Korea Financial Investment Association, the country's major brokerages enjoyed profits in their overseas business in the first nine months of 2018.
Mirae Asset Daewoo's overseas operations recorded 75 billion won ($70 million) in net income between January and September.
Nearly half of the profit came from its corporate body set up in Hong Kong, a key overseas operation headed by Mirae Asset Daewoo Hong Kong Chairman Park Hyeon-joo, former chairman and founder of Mirae Asset Group.
Since 2008, the Hong Kong body has offered SICAV, an open-ended collective investment plan, in Luxembourg. This was the first time a Korean asset management provided a sophisticated financial investment method common in Western Europe, especially Luxembourg, Switzerland, Italy, Spain, Belgium, Malta and France.
In 2005, it rolled out the Mirae Asset Asia-Pacific Star Fund, the first overseas fund introduced by a domestic financial services firm.
The company sold part of its corporate body set up in the U.K. and injected the cash into the Hong Kong operation, increasing the firm's capital to nearly 2 trillion won.
A corporate body of the Korea Investment and Securities in Indonesia posted 44 billion won in net income in the first three months of 2018.
Its operation in Vietnam saw 2.9 billion won in net income while that in Singapore 89 million won in the same period.
NH Investment and Securities' Hong Kong operation reported a net profit of 10.4 billion won during the same period.
Its corporate body in Indonesia also enjoyed a net income of 1.5 billion won, while those in New York and Singapore had 800 million won and 66 million won, respectively.
However, its entities in China and Vietnam reported respective net losses of 6.2 billion won and 300 million won.
The overseas expansion comes amid a growing need to identify new sources of revenue as the domestic market has become saturated.
“We are expanding overseas to diversify our portfolio. We will continue to strengthen our models to make profits comparable to that of global investment banks,” an official from Mirae Asset Daewoo said.
In September, 13 Korean brokerages operate a total of 47 corporate bodies and 35 liaison offices in overseas markets.
Of the 47, Mirae Asset Daewoo had 12, accounting for a quarter of the total, followed by Korea Investment and Securities (seven), NH Investment and Securities (six) and Shinhan Investment (five).