Five major Korean securities firms are reporting unprecedented second-quarter earnings driven by explosive trading volume growth, according to iM Securities research. The combined net profit of Mirae Asset, Korea Investment, NH Investment, Samsung, and Kiwoom securities for Q2 is projected at 3.934 trillion won, up 126% year-over-year. Despite these strong fundamentals, brokerage stocks have underperformed the KOSPI index since April. Analysts attribute the disconnect to intensified semiconductor sector concentration and investor concerns about earnings peaking. The surge in trading activity followed the late May launch of leveraged ETFs, which triggered concentrated short-term arbitrage trading and pushed June daily average trading volumes to 137.5 trillion won.
Five Korean Brokerages Project 3.934 Trillion Won Q2 Net Profit
According to iM Securities researcher Seol Yong-jin, the combined controlling interest net profit of Mirae Asset, Korea Investment, NH Investment, Samsung, and Kiwoom securities for Q2 is projected at 3.934 trillion won. This represents a 126% surge compared to the same period last year. Brokerage commission fees emerged as the primary driver of the strong performance. Mirae Asset Securities also recorded significant valuation gains from asset appreciation including SpaceX holdings, further boosting profitability across the sector.
June Trading Volume Reaches 137.5 Trillion Won After Leverage ETF Launch
Following the late May launch of leveraged ETFs, concentrated short-term arbitrage trading drove June daily average trading volumes to approximately 137.5 trillion won. The Q2 overall daily average trading volume is estimated at around 118 trillion won. The introduction of leveraged ETFs created new arbitrage opportunities that attracted significant market participation, directly increasing brokerage commission revenue during the quarter.
Brokerage Stocks Underperform KOSPI Since April Despite Earnings Surge
Brokerage sector returns began declining in April after initially outperforming the KOSPI earlier in the year due to high beta characteristics. Even Mirae Asset Securities, which showed the largest gains within the sector, saw its year-to-date returns fall below the index after mid-June. Market participants cite intensified semiconductor sector concentration as the primary cause of the divergence. With AI-driven momentum favoring large-cap semiconductor stocks like Samsung Electronics and SK Hynix, capital flows bypassed brokerage stocks despite their strong earnings and valuation appeal. Additional concerns include limited upside potential for trading volumes beyond the current 130 trillion won level and exhausted margin lending capacity at major brokerages, which constrains further interest income expansion. Macro factors including prolonged inflation concerns and rising interest rates and exchange rates also present headwinds for the securities industry.
iM Securities Analyst Recommends Korea Financial Group and NH Investment Securities
iM Securities researcher Seol Yong-jin stated that companies capable of actively generating profits using equity capital beyond simple brokerage dependence are advantaged in the current environment. He identified Korea Financial Group, which can defend revenues through commercial paper and integrated managed accounts (IMA), and NH Investment Securities, which offers stable access during index corrections through high dividend yields, as viable alternatives. Seol noted that brokerage stocks could attract attention when sector concentration eases, but cautioned that if semiconductor concentration dissolves alongside index declines, high-beta brokerage stocks may experience significant downside volatility regardless of earnings levels.
FAQ
What Q2 earnings did Korean brokerages report?
Five major Korean securities firms—Mirae Asset, Korea Investment, NH Investment, Samsung, and Kiwoom—projected combined Q2 net profit of 3.934 trillion won, up 126% year-over-year according to iM Securities research.
Why are brokerage stocks underperforming despite strong earnings?
Brokerage stocks have underperformed the KOSPI since April due to intensified semiconductor sector concentration that diverted capital flows to large-cap chip stocks, and investor concerns about earnings peaking after trading volumes surpassed 130 trillion won with limited further upside potential.
What drove the surge in Q2 brokerage earnings?
The late May launch of leveraged ETFs triggered concentrated short-term arbitrage trading, pushing June daily average trading volumes to 137.5 trillion won and Q2 overall daily average volumes to approximately 118 trillion won, significantly boosting brokerage commission revenue.
