Securities industry expected to be strong in first half of next year: report

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The securities industry in South Korea is anticipated to exhibit robust performance in the first half of next year, buoyed by the expected rise in exports and stock market gains, as outlined in a report by IBK Investment & Securities released on Wednesday.

“The anticipation stems from the projected increase in South Korea’s exports driven by the recovery in the semiconductor industry and China’s economic stimulus, consequently leading to a rise in the Kospi index,” Woo Do-hyung, an analyst at IBK Investment & Securities, said in the report.

The correlation coefficient between the Kospi and the securities industry index stands at 0.82, indicating an expected increase in the securities industry index alongside the rise in Kospi.

Furthermore, with the upcoming abolition of the foreign investor registration system in December, a favorable environment is anticipated to be created with increased inflow of foreign investment funds, contributing to higher trading volumes. The report also analyzed the seasonal strength typically observed in the securities industry during the first quarter.

“Typically, at the beginning of the year, major shareholders tend to sell stocks to avoid capital gains taxes, and there is also a selling trend after dividend payouts, resulting in increased trading volumes,” the analyst said. “Over the last decade, the securities industry index has consistently shown favorable returns from January to April compared to the Kospi.”

While the revised dividend payment procedure slated to begin next year is expected to have limited influence on January trading volumes, the analyst predicted.

Highlighting preferred stocks within the securities industry, the analyst recommended Kiwoom Securities as the top pick and identified Mirae Asset Securities and Korea Investment Holdings as stocks of interest.

“Over the past ten years, the average January returns were highest for Kiwoom Securities at 5.7 percent, followed by Mirae Asset Securities and Korea Investment Holdings at 4.5 percent each, compared to Kospi’s average return of 0.8 percent,” the analyst noted.