As Big Money Keeps Pouring Into Institutions, Securities Stocks Soar

Mirae Asset Daewoo and Korea Financial Group Net Buy Over 60 Billion Won in a Month... Kiwoom Securities Hits New High

[Asia Economy Reporter Song Hwajeong] As the KOSPI recovers above the 2100 level and continues its strong performance, securities stocks are also riding the upward trend. Securities firms' second-quarter earnings this year are expected to be better than anticipated, and with institutional funds pouring in, the stock price rally is expected to continue.

As of 9:35 a.m. on the 3rd, Kiwoom Securities was trading at 91,400 KRW, up 2.24% (2,000 KRW) from the previous day. During the session, it rose to 92,700 KRW, setting a new 52-week high in just one day. Major securities firms such as Meritz Securities (4.48%), NH Investment & Securities (3.38%), Mirae Asset Daewoo (3.56%), and Samsung Securities (3.37%) also continued their three-day winning streak on the 3rd. Korea Financial Group has been on a six-day consecutive rise.

The KOSPI Securities Industry Index has risen 7.17% from the beginning of this month through the previous day, showing a remarkable increase in securities stocks alongside the overall market rally. This strong performance in securities stocks has been driven by institutions. Institutions have consecutively net-bought Kiwoom Securities for 13 trading days, Mirae Asset Daewoo for 7 days, and Korea Financial Group for 6 days. Over the past month, Mirae Asset Daewoo has net-bought 65.4 billion KRW, Korea Financial Group 64.7 billion KRW, NH Investment & Securities 31.9 billion KRW, and Kiwoom Securities 25.3 billion KRW. Additionally, foreigners have recently turned their attention to securities stocks, purchasing NH Investment & Securities, Meritz Securities, and Daishin Securities for two consecutive days.

The rise in securities stocks appears to be due to the stock market's continued strength despite unstable external conditions. The KOSPI has risen 10.12% over the past month and recovered above the 2100 level during the session on this day. The KOSDAQ has increased 15.84% over the past month and is up 11.01% since the beginning of the year, fully recovering from the shock caused by the novel coronavirus infection (COVID-19).

As the stock market revives, a green light has turned on for securities firms' earnings improvement. Park Hyejin, a researcher at Daishin Securities, said, "Although COVID-19 is not over, securities firms' earnings are rapidly normalizing thanks to the surge in trading volume in April and May, which was better than expected given the anticipated prolonged pandemic." According to Daishin Securities, the average daily trading volume in the second quarter exceeded 20 trillion KRW by the end of May, significantly surpassing the first quarter's average of 15 trillion KRW. Customer deposits, which are funds waiting to buy stocks, have also shown a steady increase. Deposits, which were around 40 trillion KRW at the end of March when the index plunged due to COVID-19, approached 45 trillion KRW by the end of May. During the same period, the credit loan balance, which had decreased to 6.3 trillion KRW, exceeded 10 trillion KRW. Park said, "As confirmed in the first-quarter earnings, securities firms showed improvement in all areas except product management income," adding, "In the second quarter, product management income is expected to turn positive, and earnings will improve across all revenue sources."