Securities Stocks Rally as KOSPI Surges Past 3,300 Mark

KOSPI Surpasses 3,300 for the First Time in 4 Years and 2 Months, Setting a New All-Time High
Securities Stocks Support KOSPI's Breakthrough of the 3,300 Mark with Recent Strength
KRX Securities Index Up 12% This Month on Policy Optimism
Securiti

As the KOSPI reaches an all-time high, expectations are rising that the bullish trend in securities stocks will gain further momentum. With favorable policy factors and strong market performance driving improved earnings, it is anticipated that the robust stock price trend seen in the first half of the year will continue into the second half.

According to the Korea Exchange on September 11, the previous day, the KRX Securities Index closed at 1,484.76, up 4.12% from the previous session, marking its sixth consecutive day of gains. The KRX Securities Index has risen by 12.48% so far this month.

Securities stocks also showed notable strength by individual company. The previous day, Kiwoom Securities closed at 249,000 won, up 7.79%, marking a seven-day winning streak. During the session, the stock climbed to 250,500 won, setting a new 52-week high. Korea Financial Group rose by 6.15% after four consecutive days of gains, while Mirae Asset Securities, NH Investment & Securities, and Samsung Securities rose by 3.18%, 2.72%, and 2.20%, respectively.

The strong performance of securities stocks also contributed to the KOSPI reaching an all-time high. The previous day, the KOSPI closed at 3,314.53, up 1.67%, once again setting a record high. During the session, it rose to 3,317.77, breaking the previous intraday record. The previous all-time intraday high for the KOSPI was 3,316.08, set on June 25, 2021, while the previous closing high was 3,305.21, set on July 6, 2021.

Although the KOSPI and securities stocks maintained an upward trend in the first half of the year, they underwent a period of adjustment throughout August following the government's tax reform announcement, which fell short of market expectations. As a result, the average daily trading value in August was 15.4 trillion won for the Korea Exchange and 7.2 trillion won for NextTrade, totaling 22.7 trillion won, down 18.1% from the previous month. Kang Seunggeon, a researcher at KB Securities, analyzed, "Expectations for a money move into the capital market weakened because the criteria for separate taxation of dividend income and major shareholder transfer taxes were set at higher-than-expected levels, and uncertainties such as tariff negotiations were also reflected."

However, with renewed policy expectations, both securities stocks and the KOSPI have resumed their upward trend. During the regular National Assembly session in September, the third amendment to the Commercial Act, which includes a mandatory share buyback and cancellation requirement, is being discussed. Recently, the government has also been reported to be positively considering maintaining the current 5 billion won threshold for the major shareholder stock capital gains tax, boosting expectations for securities stocks. In addition, expectations of a U.S. interest rate cut have created a favorable environment for securities stocks.

There are forecasts that the bullish trend in securities stocks will not be short-lived. Ko Yeonsu, a researcher at Hana Securities, stated, "This week's stock price increase will not be limited to expectations for capital gains tax relief. In addition to the proposal for separate taxation of dividend income, the inclusion of a mandatory share buyback and cancellation provision in the third Commercial Act amendment is expanding the possibility of a valuation rerating. While there are concerns about a peak-out in the second half following record-breaking earnings in the first half, policy changes will create a virtuous cycle leading to improved supply and demand, increased trading value, revitalized capital markets, and improved performance in investment banking, wealth management, and trading."

Ahn Youngjun, a researcher at Kiwoom Securities, also commented, "Although there may be some fatigue from the short-term rally, the positive outlook for the securities sector should not be limited to the short term. While securities firms typically show stronger performance in the first half of the year and weaker in the second, this year, robust trading value and reduced one-off costs are expected to result in solid earnings in the second half as well. Unlike in the past, the number of domestic stock investors has increased significantly, making it likely that investor-friendly policies will continue. Furthermore, as seen in the case of Japan, if market-friendly policies persist, the stock market rally is expected to continue and trading value will be elevated."