Stock Market Boom Boosts Asset Manager Profits, But Polarization Deepens

While asset management companies have continued to post strong results due to the bullish stock market, polarization within the industry is deepening. Owing to risks such as market concentration and leveraged investments, the number of asset management firms reporting losses has actually increased.

According to the Financial Supervisory Service on September 11, the net profit of asset management companies in the second quarter of this year was provisionally tallied at 2.6889 trillion won, up 83.4% from the previous quarter. Operating profit rose by 78.9% during the same period, reaching 2.4195 trillion won.

Strong performance in the stock market led to a significant jump in commission income and a considerable increase in operating results. In the second quarter of this year, commission income amounted to 2.6072 trillion won, up 37.7% from the previous quarter. Most of this was driven by fund-related commission revenue, which reached 2.0326 trillion won. Discretionary advisory commission income was 574.6 billion won.

Total assets under management (AUM)—including both fund net assets and discretionary account valuation—stood at 2,777.5 trillion won, a 17.9% increase from the previous quarter.

Net assets in funds amounted to 1,730.9 trillion won. Of this, public fund assets totaled 897.4 trillion won, up 27.2% quarter-on-quarter, driven by the rise in the KOSPI index and the expansion of the Exchange Traded Fund (ETF) market. Private fund assets rose only 6.2% to 833.5 trillion won. Valuation of assets under discretionary accounts increased by 20.9% over the same period, reaching 1,046.6 trillion won.

The proportion of asset management companies operating at a loss has increased. Out of a total of 513 asset management companies, the proportion of loss-making companies rose from 37.6% in the first quarter of this year to 42.9% in the second quarter. During the same period, the ratio among public asset managers (77 firms) fell from 15.6% to 14.3%, but among private asset managers (436 firms), it jumped from 41.5% to 47.9%.

An official from the Financial Supervisory Service explained, "While quarterly earnings were strong due to the rise in market indices, risks such as the concentration of investment flows into specific sectors and stocks, as well as excessive short-term trading and leveraged investments related to ETFs, have become increasingly significant."

The Financial Supervisory Service plans to step up monitoring of vulnerable asset management companies and will continue efforts to curb leveraged investments and mitigate market volatility.

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