"Securities Stocks Shine on Bull Market Rally: Which Will Outperform Most? [Weekend Money]"

SK Securities Names Samsung Securities and Korea Financial Group as Top Picks

Following record-breaking quarterly results for the securities industry in the first quarter, driven by a booming stock market, expectations are high that the stock market will remain strong in the second half of the year as well, sustaining the appeal of securities stocks. The competitiveness of brokerage and asset management, as well as the performance of book business (a revenue source less sensitive to fluctuations in trading volume), are cited as key variables driving the earnings of each securities company.

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On May 30, Jang Youngim, a researcher at SK Securities, stated, "Recently, stock prices have risen sharply, especially in semiconductor stocks. However, in a phase of rising stock prices and increasing average daily trading volume, there is no reason for securities stocks to be left out." She maintained an 'overweight' investment opinion on the securities sector and picked Samsung Securities and Korea Financial Group as her top picks.

In the first quarter, the securities industry posted its highest-ever quarterly results as brokerage and asset management fee income, brokerage-related interest income, and investment income improved, mainly due to gains from the valuation of securities holdings driven by a strong stock market. The combined first-quarter net income attributable to controlling shareholders of the six securities companies analyzed by SK Securities (Mirae Asset, Korea Investment & Securities, Samsung Securities, NH Investment & Securities, Kiwoom Securities, and Daishin Securities) was 3.4639 trillion won, up 108.0% from the previous quarter.

The outlook for the stock market in the second quarter is also positive. The SK Securities asset strategy team set the KOSPI index band for the second half of the year at 6,500 to 11,000, with a year-end target of 9,900. Accordingly, the average daily trading volume for the Korea Exchange and NextTrade is projected to reach 72.5 trillion won this year, and the combined net income attributable to controlling shareholders of the six securities companies is forecast at 11 trillion won, up 58.9% from the previous year.

Companies with a high ROE contribution from brokerage and asset management earnings have greater growth potential in a bullish stock market. This is the reason Samsung Securities was selected as the top pick. According to SK Securities' estimates for the ROE contribution of brokerage and asset management earnings among the six companies, Samsung Securities was highest at 21.7%, followed by Kiwoom Securities at 20.9% and Mirae Asset Securities at 20.6%.

Korea Financial Group was selected as the top pick from the perspective of benefiting from the investment division. In the second half of the year, as market interest rates continue to rise, there are concerns over weak bond investment returns. In this environment, how much other investment profits—such as gains from the valuation of securities holdings, early redemption of equity-linked securities (ELS), issuance notes, and ETF liquidity provision—can offset these concerns will be a key criterion. Based on this, Korea Financial Group is seen as highly competitive.

Researcher Jang added, "Korea Financial Group is expected to see higher investment profit year-on-year, despite a high base from last year's valuation gains, thanks to strong performance in the ELS segment, the issuance notes business of its securities division, and equity investment returns from its asset management subsidiaries." Korea Investment & Securities is also expected to outperform other firms in terms of estimated profit contribution from issuance notes (440 billion won) and the annualized yield of its comprehensive investment account (IMA) (3.92% per annum for its No. 1 product).

This content was produced with the assistance of AI translation services.