138 Trillion Won to 56 Trillion Won in Three Months... This Stock Faces a Shock [Weekend Money]

Securities Companies Face Unavoidable Profit Decline
as KOSPI Trading Volume Plummets

Recently, as the domestic stock market has moved sideways, securities stocks—which had been enjoying record-high profits in the first half of the year—are now facing the risk of declining earnings in the second half.

On September 25, Shinhan Securities announced that the operating environment for securities companies had deteriorated rapidly, and that it would lower target prices for its coverage securities stocks.

Shinhan Securities analyzed that the average daily trading value on KOSPI (including ETFs) surged from 84 trillion won in April to 138 trillion won in June, before plunging to 56 trillion won in September. The company explained that this was due to a sharp drop in trading turnover, which resulted from the absence of leading stocks and rising volatility in the stock market.

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Researcher Heeyeon Lim pointed out, "As risk-averse sentiment has strengthened, the outflow of capital from the stock market into bank deposits has accelerated," adding, "Sales of financial products overall, including target-conversion wrap accounts, remain sluggish."

She further stated, "Another pillar of securities firms' profits, the IB industry, is also experiencing prolonged weakness. The improvement in cash generation by semiconductor companies, along with the impact of policy finance measures such as productive finance and the National Growth Fund, has reduced demand for corporate bond issuance by general companies. In addition, a rapid rise in interest rates has further weakened the attractiveness of issuing corporate bonds." She added, "The trading division is also expected to see weak performance due to the impact of rising interest rates on investment results."

Reflecting downward revisions in earnings estimates for securities firms, Shinhan Securities announced that it had lowered target prices for major coverage securities companies: Mirae Asset Securities (-26%), Korea Financial Group (-17%), NH Investment & Securities (-15%), Samsung Securities (-15%), and Kiwoom Securities (-14%).

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