"Stock Market Volatility to Remain High This Year... Difficult to Respond to Market Changes"

Min Si Sung, Executive Vice President of KB Securities, Interview
"Bond Outlook Positive Due to Stabilizing and Lowering Interest Rates"
"This Year's Results Hinge on Trading Division"
"Newly Established Global Business Group to Become a Gateway for Major Overseas Investors in Korea"

"Due to the possibility of an economic recession stemming from the mutual tariff impositions by the United States, and the growing calls for interest rate cuts, bond returns are expected to be solid in the first half of the year. However, the high volatility in equities will make it difficult to respond effectively."

Min Si Sung, Executive Vice President, Head of Sales and Trading (S&T) Division and Head of Sales Headquarters at KB Securities

Min Si Sung, Executive Vice President and Head of Sales and Trading (S&T) Division and Head of Sales Group at KB Securities, shared this outlook on the market for this year in a recent interview with Asia Economy. As domestic political issues and concerns over a US-China tariff war persist, stock market volatility has increased in the second quarter. The KOSPI has fallen below the 2,500 mark this month.

Min projected that the bond sector would perform well this year as interest rates stabilize at lower levels. He said, "We expect the United States to cut interest rates several times this year, and we are preparing for rates to trend downward for the time being," adding, "Bond returns are expected to be solid in the first half of this year."

With stock market volatility on the rise, trading performance is expected to be a key factor in this year's results. Last year, KB Securities posted consolidated operating profit of 780.8 billion KRW and net profit of 590.4 billion KRW, up 14.80% and 52.14% year-on-year, respectively. Notably, the sales division (institutional sales) achieved record results last year on the back of strengthened market dominance and continued growth. The company maintained its No. 1 market share in domestic institutional equity brokerage and inbound high-touch markets, while also enhancing its passive investment capabilities and increasing revenues from domestic and overseas equities and over-the-counter derivatives trading. The trading division expanded profits from bond management and equity-linked securities (ELS) hedging through swift and timely responses to market changes. Min stated, "Our goal is to achieve results in trading this year that are comparable to those in wealth management (WM) and investment banking (IB), based on operating profit. The key lies in the trading division," adding, "Bond management is responding well to the market, but equities remain a challenge. The most important factor in trading is the stability of profits and losses, but volatility has been high every year. As a result, we are adopting more market-neutral strategies for equities."

At the end of last year, KB Securities established a Global Business Group within the S&T division through organizational restructuring. This is expected to create synergies in overseas business. Min explained, "The Global Business Group was newly established at the end of last year by incorporating the Overseas Business Headquarters, and it now provides comprehensive global investment solutions by combining existing international sales and Prime Brokerage Services (PBS) with local overseas networks. For our New York and Hong Kong subsidiaries, which are in developed markets, we are continuously pursuing external growth through global partnerships. For our Vietnam and Indonesia subsidiaries, we are expanding overall business by transferring our headquarters' capabilities." He emphasized a particular focus on partnerships with overseas investment banks (IBs). Previously, in 2020, KB Securities signed a business agreement with global IB Jefferies. Min said, "We are working to further strengthen our partnership with Jefferies, while also seeking to establish additional global partnerships," adding, "Through partnerships with overseas IBs, we are pursuing strategies to minimize costs and maximize profits."

Especially in the PBS division, KB Securities is expected to serve as a gateway for major overseas investors looking to invest in Korea through its capital introduction business. Capital introduction is a service that connects domestic and overseas institutions with hedge fund managers. Recently, KB Securities linked domestic asset management firms under contract with its PBS division to the Abu Dhabi Investment Council (ADIC), a sovereign wealth fund of the United Arab Emirates (UAE). Min explained, "Global investors who want to invest in Korea do not need to invest directly; they can simply find a competent asset manager and entrust their funds, but there is a lack of information. The KB Securities PBS division closely manages hedge funds and maintains an extensive database, including track records, personnel composition, and fund structure styles," adding, "ADIC held meetings with asset managers through KB Securities and is expected to select about two firms soon." He continued, "We are also preparing to connect other investors, so KB Securities could become the gateway for major global investors into Korea."