The KOSPI index is racing toward 9,000 on the back of semiconductor strength, but securities shares have struggled to rebound. As interest-rate volatility widens, uncertainty over brokerages' product operation profitability appears to be weighing on their stock prices.
According to Korea Exchange (KRX) and NEXTRADE (NXT) on the 3rd, the combined cumulative transaction value of the two exchanges from the start of the second quarter through the 1st came to 3,557.099 trillion won.
The average daily transaction value reached 86.7585 trillion won. That is up 30.19% from the first quarter's daily average transaction value of 66.6391 trillion won.
Despite the increase in transaction value, securities shares have remained weak. The KRX securities index surged 59.82% in the first quarter, but its gain in the second quarter has been limited to 6.87%. Notably, it has fallen 2.70% since last month.
Stock prices of major components of the index also slowed across the board. Mirae Asset Securities soared 163.81% in the first quarter but turned 1.14% lower in the second quarter. Kiwoom Securities also rose 41.80% in the first quarter, then fell 7.19% in the second quarter. The index includes Korea Investment Holdings, NH Investment & Securities, and Samsung Securities.
Considering that the KOSPI index climbed 19.89% in the first quarter and then rose 73.94% in the second quarter, the underperformance of securities shares stands out even more.
Typically, brokerage (brokerage) fees from stock transactions are a core revenue source for securities firms, so an increase in transaction value feeds into expectations for better earnings and acts as a positive for share prices. But this formula does not appear to be applying to brokerage stocks lately.
The securities industry said securities shares have fallen out of investors' focus as market funds have concentrated only on AI-related leaders such as semiconductors and humanoids.
Ko Yeon-su of Hana Securities said, "Even though the domestic market's average daily transaction value hit a record high in the second quarter, continued macro uncertainty and a supply-demand tilt toward semiconductors and AI left securities share prices sluggish."
The larger interest-rate volatility since the second quarter is also cited as a factor pressing securities share prices. Since April, bond yields have repeatedly swung sharply while trending higher, leading to analysis that revenue in the bond operation institutional sector, a key revenue pillar for brokerages, was not large.
Park Hye-jin of Daishin Securities noted, "In the first quarter, January and February were solid, but many brokerages recorded losses in March (in bond operations)," adding, "In the second quarter, (rate) volatility has expanded since April, making related revenue improvement difficult."
Park added, "With ample liquidity and nationwide interest in stocks, the industry backdrop is positive," but also said, "Because share prices have largely priced in the next 12 months of results in advance, a selective approach is needed when investing in securities shares to screen out names with high valuations."