Brokerage stocks have shown strength this month, outpacing the KOSPI's gains. The rally reflects expectations that securities firms will benefit from the historic bull run in the Korean stock market. However, analysts say the sector is entering a consolidation phase, as the stocks have not only climbed steadily but also faced a wave of profit-taking following their recent surge.
According to the Korea Exchange on Thursday, the KRX Securities Index jumped 17.18% this month, outpacing the KOSPI's 13.63% gain over the same period. Last month, the KRX Securities Index rose 9.83%, significantly lagging the KOSPI's 30.61% advance during that period.
The relatively muted performance of the KRX Securities Index last month is attributed to shrinking trading volume, as Korea's stock market was rattled by geopolitical tensions in the Middle East. The KOSPI's daily trading value stood at around 63 trillion won on March 4 this year but plunged to the 21 trillion won range on the 13th of last month, shrinking to one-third of its peak. Trading volume has since recovered to between 30 trillion and 40 trillion won, but remains below early March levels.
Brokerage stocks notably rallied together starting October 4. Samsung Securities (016360.KS) jumped 28.28% on that day, while Yuanta Securities Korea and Korea Investment Holdings rose 14.9% and 9.2%, respectively. Mirae Asset Securities (006800.KS) surged 19.20% on the 6th. "Securities stocks were overlooked names, overshadowed by strong earnings tied to artificial intelligence (AI) capex, despite continued retail-driven trading inflows and their own solid recent earnings releases," said Lee Jae-won, an analyst at Yuanta Securities Korea.
However, on the 8th, the sector could not avoid declines as profit-taking emerged. Samsung Securities fell 5.51% and Yuanta Securities Korea dropped 3.89% on that day. NH Investment & Securities (005940.KS) also slid 2.92%, while Kiwoom Securities (039490.KS) declined 2.90% and Korea Investment Holdings dropped 2.72%, with most brokerage stocks ending lower.
Market watchers expect further upside in the Korean stock market, along with the launch this month of single-stock leveraged exchange-traded funds (ETFs), to boost retail investor turnover and work in favor of brokerage stocks. "We maintain a Buy rating on the securities sector, expecting foreign buying inflows and rising retail turnover," said Woo Do-hyung, an analyst at Yuanta Securities Korea.
