[Click eStock] Securities, Brokerage Indicators Defend More Than Worry... Price Attractiveness

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment stated on the 7th that the securities sector should focus on valuation attractiveness from a mid- to long-term perspective.

Lee Hong-jae, a researcher at Hana Financial Investment, said, "Although there is a possibility of defending performance through gains from the valuation of non-marketable assets, the likelihood of indicators improving sharply in December is somewhat limited, so the securities sector's recurring earnings in the fourth quarter are expected to slow compared to the third quarter." However, he added, "The downside rigidity of brokerage indicators, which have continuously declined since the beginning of the year, has been confirmed, and short-term bond yields have sufficiently priced in the possibility of liquidity reduction, so it is believed that the indicators have passed their bottom." He continued, "Although momentum that will be highlighted immediately is limited, considering that the average dividend yield of the universe securities sector in 2021 reached 6.5%, and the average multiples are only 0.6 times 12-month price-to-book ratio (PBR) and 5.2 times price-to-earnings ratio (PER), a mid- to long-term valuation call is fully possible," adding, "For short-term preference, we suggest Samsung Securities and NH Investment & Securities, which have high dividend appeal."

The average daily trading value in November decreased by 11.8% compared to the same period last year but slightly increased by 7.2% from the previous month to 24.3 trillion KRW, and the cumulative amount for the fourth quarter recorded 23.6 trillion KRW. Customer deposits were 65.9 trillion KRW, and credit trading loans were 23.5 trillion KRW, rising by +7.0% and +30.3% respectively compared to the previous year. Although the growth rates of major indicators have significantly slowed, considering the rise in the base interest rate and loan regulations, which inevitably slow down capital inflow into the stock market, and the fact that it is a period when the year-end major shareholder capital gains tax issue is highlighted, the brokerage indicators in November were better than expected.

Major trading-related indicators in November are judged to be neutral compared to October. This is because the impact of bond valuation losses has decreased, but earnings related to ELS (Equity-Linked Securities) are understood to be very poor. In October, market interest rates surged, expanding valuation losses, but by the end of November, the 1-year and 3-year yields fell by 12 basis points and 30 basis points respectively from the end of the previous month to 1.29% and 1.80%, easing the burden of bond valuation losses. On the other hand, the scale of early redemption of ELS was 1.2 trillion KRW, a 25.5% decrease compared to October, which had already sharply declined, and the issuance scale was 3.0 trillion KRW, marking the lowest levels of ELS-related indicators throughout the year.