As the KOSPI rebounded by reclaiming the 7,500 level early in the session, securities stocks are broadly stronger. Analysts said expectations of earnings improvement on increased stock market transaction value and views that the securities sector remains undervalued have stirred investor sentiment.
As of 9:46 a.m. on the 10th in the main bourse, SK Securities(001510) was trading at 2,455 won, up 190 won (8.39%) from the previous session.
At the same time, Hanwha Investment & Securities(003530) was up 8.12%, NH Investment & Securities 7.69%, and Eugene Investment & Securities 7.41%.
In addition, Korea Investment Holdings(071050), Kyobo Securities, Sangsangin Investment & Securities, Yuanta Securities Korea, Kiwoom Securities, and Samsung Securities were posting gains of 5% to 6%.
Brokerages expect second-quarter results at securities firms to beat market expectations. They said brokerage (commission trading) revenue has risen sharply on the KOSPI's gains and increased transaction value, while sales of financial products in the wealth management (WM) division have also expanded.
Lim Hee-yeon, a research fellow at Shinhan Investment & Securities, said, "Considering earnings, industry conditions, and momentum, the current valuation of securities stocks is excessively undervalued," adding, "With the stock market boom at an all-time high, record earnings are expected, but the price-to-book ratio (PBR) remains at year-end levels."
Shinhan Investment & Securities said the major securities firms' results are likely to top market forecasts as the average daily transaction value in domestic stocks rose about 40% from the previous quarter. In particular, it estimated that Mirae Asset Securities, Korea Investment Holdings, Kiwoom Securities, Samsung Securities, and NH Investment & Securities would all post second-quarter net profit above consensus.
Lim said, "In a phase of expanding transaction value, the benefit will be larger for securities firms with a strong retail base," maintaining an "overweight" view on the securities sector and naming Korea Investment Holdings and Kiwoom Securities as top picks.