Korean brokerages are expanding their capital bases amid a stock market rally, but the faster growth is raising concerns about weaker profitability and greater exposure to volatile markets. Korea Investment & Securities and KB Securities posted sharp equity-capital gains in June, while peers including Kiwoom, Meritz, Hana and Samsung also grew. The industry is benefiting from broader KOSPI gains and more diversified revenue streams beyond retail trading. Market participants say brokerages must use capital more efficiently rather than simply accumulate it.
A view of Seoul’s Yeouido financial district / gettyimagesbank
Korean brokerages are rapidly expanding their capital bases on the back of a robust stock market rally, though the rapid scale-up is fueling concerns over declining profitability and greater exposure to volatile markets, industry officials said Thursday.
Korea Investment & Securities saw its equity capital jump 18.2 percent to 13.19 trillion won ($9.46 billion) in June, up from 11.16 trillion won last December, driven by strong earnings and proactive capital raises to fund new ventures.
Medium-sized firms also posted steep growth. KB Securities saw its equity capital jump 19.2 percent from 6.69 trillion won to 7.98 trillion won, recording the highest growth rate among the top eight brokerages. Peers including Kiwoom, Meritz, Hana and Samsung also posted solid gains.
