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| Korea's financial district in Yeouido, Seoul / gettyimagesbank |
By Lee Min-hyung
Korea's major securities firms are forecast to report weaker-than-expected earnings for 2022, as their brokerage commission revenues plunged in the wake of an unexpected stock market crash sparked by steep rate hikes and multiple external risk factors such as the outbreak of war in Ukraine, data showed Friday.
Mirae Asset Securities, the nation's largest brokerage house by market capitalization, was the first to have announced preliminary earnings. According to data from the Financial Supervisory Service, the brokerage reported an estimated operating profit of 845.9 billion won ($686 million) in 2022, down 43.1 percent from the previous year. Its net profit also suffered a similar drop of 47.7 percent during the same period.
Other Korean securities firms also face similar dismal earnings outlooks from last year. According to data from market tracker FnGuide, the combined operating profit of Korea's five brokerage houses ― including Mirae Asset Securities, Samsung Securities and NH Investment & Securities ― fell by around 40 percent in the fourth quarter compared to a year ago. Meritz Securities is the only brokerage here that is forecast to have seen earnings improve, with estimated operating profit rising by 9.6 percent during the same period.
But this is in contrast to the ongoing stock rally. Shares of Mirae Asset Securities hovered at around 6,000 won at the beginning of 2023, but have since risen to over 7,000 won, as of Friday. The stock price of Korea Investment & Securities also showed a similar curve, increasing by more than 20 percent this month alone.
The stock price growth was driven by investors' growing hopes for the end of the key rate hike cycle. The benchmark KOSPI stood at around 2,200 points earlier this month, but has since achieved momentum for a robust rally. The main bourse reached closer to the 2,500-point mark as of Friday afternoon.
Despite brokerage houses' massive earnings falls last year, market analysts expressed a rosy outlook on their possible rebound this year.
"Foreign investors have driven the recent growth of the local stock market, as they focus more on emerging markets amid the weakening dollar," Yum Dong-chan, an analyst at Korea Investment & Securities, said. "The capital inflow from foreigners is more robust in Korea, rather than other emerging markets ― such as Taiwan and India."
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