There was an analysis that the valuation appeal of securities stocks is resurfacing as their gains have significantly lagged KOSPI so far this year. The market is taking a cautious view on securities stocks as it prices in a possible rate hike in the second half, but given the potential for earnings improvement from higher transaction value and a strong stock market, current share levels are seen as excessively discounted.
Ko Yeon-su, a researcher at Hana Securities, said in a report on the 17th that "on a cumulative basis for the second quarter, the KRX securities index rose only 6.1%, underperforming KOSPI's return by 68.5 percentage points," maintaining an Overweight rating on the securities sector.
In fact, Mirae Asset Securities and Kiwoom Securities remain 10.8% and 0.9% lower, respectively, compared with early March, right after the outbreak of the U.S.-Iran war. Samsung Securities, Korea Investment Holdings and NH Investment & Securities showed relatively solid share-price trends, but fell well short of KOSPI's gain.
The market is concerned that trading profit and loss at securities firms will decline as it factors in the possibility of a base rate hike in the second half. That is because when rates rise, bond prices fall, which can lead to valuation losses on bonds held by securities firms.
However, Hana Securities judged these concerns to be excessive. Ko said, "Most securities firms are simultaneously running hedging strategies on their bond positions, so valuation losses from higher rates are expected to be better than feared," adding, "Rather, an increase in stock-related valuation gains from a buoyant market will offset it."
Above all, the retail operating environment, a key variable for securities firms' results, remains favorable. On a cumulative basis for the second quarter, the average daily transaction value in the domestic market was 89 trillion won, up 33% from the previous quarter, and the average daily transaction value of exchange-traded funds (ETF) also rose 42% over the same period to 25 trillion won.
In particular, since June, the domestic market's average daily transaction value has been hovering around 100 trillion won. Ko projected, "If the current level continues, second-quarter net profit at coverage securities firms will, on average, beat consensus by about 20%."
Hana Securities advised that, as fund inflows into the domestic stock market are expected to continue, investors should use the recent pullback as a buying opportunity.
It named Korea Investment Holdings and Samsung Securities as top picks. For Korea Investment Holdings, earnings improvement at subsidiaries from a strong market is expected, and for Samsung Securities, with a high share of revenue from brokerage (BK) and wealth management (WM), it is seen benefiting from higher transaction value.
Ko said, "For 2026, the price-to-book ratio (PBR) of Korea Investment Holdings and Samsung Securities stands at 1.0 times and 1.2 times, respectively," adding, "Expected dividend yields are 4.0% and 5.6%, respectively, making the valuation attractive."