South Korea's 10 largest brokerages have reduced their domestic branches over the past year while expanding their overseas presence, data showed. Analysts say the firms are downsizing at home as non-face-to-face trading through mobile trading systems (MTS) gains traction, while accelerating overseas expansion to develop their global business as a new growth driver.
According to the Korea Financial Investment Association on Saturday, the 10 largest domestic brokerages — Mirae Asset, Korea Investment, Samsung, KB, NH, Shinhan, Meritz, Kiwoom, Hana and Daishin — had 438 domestic outlets (branches and sales offices) as of March 31 this year. That marks a decrease of six from 444 a year earlier.
Over the same period, however, overseas outlets (local subsidiaries and offices) increased. The 10 brokerages had 63 overseas outlets this year, up four from 59 last year. By firm, KB Securities expanded its overseas offices from one to two. KB Securities established an office in Mumbai, India, last December. Mumbai, located between the Nariman Point district — a traditional commercial hub in the south — and the financial center of BKC, is regarded as "India's economic center." KB Securities is examining the potential for market entry based on its local office.
Mirae Asset Securities also expanded its overseas outlets from 17 last year to 19 this year. Its Hong Kong subsidiary established two additional units to boost business activity. The move is interpreted as an effort to expand related operations, as Mirae Asset Securities' Hong Kong subsidiary became the first among Korean brokerages to launch a digital asset retail business in Hong Kong. Kiwoom Securities also increased its overseas outlets to three, up two from one last year. Kiwoom Securities established Kiwoom Securities Holdings and a Kiwoom Securities U.S. subsidiary to strengthen its U.S. business.
Industry watchers expect domestic and overseas outlets to continue moving in opposite directions. While the number of stock investors has grown alongside the booming domestic stock market, the majority — excluding some elderly and other digitally underserved groups — now trade stocks using MTS or home trading systems (HTS). The brokerages' efforts to upgrade their MTS are tied to this trend.
The expansion is also seen as reflecting major brokerages such as Mirae Asset Securities strengthening their global business around overseas subsidiaries to diversify revenue. With overseas business net profit rising, the strategy is interpreted as nurturing it into a "second growth driver" following brokerage commissions. According to the Financial Supervisory Service, the net profit of 16 brokerages' overseas local subsidiaries reached $455.8 million (about 654 billion won) last year, surging 67.8 percent from a year earlier.
