Brokerage firms post soaring profit with investors flocking to U.S. markets

A 96 percent surge in U.S. securities trading in the first half of the year translated to huge profit for Toss Securities.

A Hana Bank trading room in Jung District, central Seoul, on July 1 [NEWS1]

With Korean investors flocking to U.S. stock markets instead of domestic bourses, brokerage firms racked up profit through the first half of this year on soaring transactions.

Toss Securities, a mobile-based brokerage house, posted an operating profit of 18.3 billion won ($13.3 million) in the second quarter, compared to a loss of 3.6 billion won in the same period last year.

This brings the broker’s half-year operating profit to 30.6 billion won, already meeting its profit target for the year. Net profit came to 34.3 billion won during the cited period, also a turnaround from a year prior, and revenue rose 81.6 percent on year to 175.1 billion won.

Toss Securities credited robust overseas trading for its steep surge in profit, as the volume of U.S. securities trading soared 96 percent from a year earlier in the January-June period, while domestic trading volume rose 38.7 percent.

“Our strong performance in U.S. securities trading as a market leader in Korea has been instrumental in continuing our growth in the first half of the year,” said Toss Securities CEO Kim Seung-yeon in a release.

Korea’s major brokerage firms also reported a significant jump in earnings in the second quarter. Korea Investment & Securities posted a 103 percent surge in net profit to 342.2 billion won in the second quarter, while Samsung Securities saw a 70 percent increase to 257.9 billion won. Kiwoom Securities logged a 74 percent jump to 232.1 billion won, Mirae Asset Securities 43 percent to 201.2 billion won, and NH Investment and Securities 8 percent to 197.2 billion won.

The rapid surge has been driven by Korean investors’ heavy trading of overseas stocks, especially in the United States.

According to data compiled by the Korea Securities Depository, the total transaction volume of overseas stocks — which includes both selling and buying — came to $206 billion in the first half of the year, up 45.5 percent from the same period last year. U.S. stocks accounted for the majority of transactions, taking up more than 90 percent.

The overseas stock-trading volume by retail investors was equivalent to about 8 percent of their trading volume of domestic stocks, the highest ratio ever recorded. Additionally, retail investors have become net sellers of local stocks, shedding shares worth 13.5 trillion won in the first half of the year on the Kospi.

Such a trend emerged after the Covid-19 outbreak as monetary easing drove liquidity in the market, and was recently amplified by the AI boom that has swept the globe.

“Retail investors have been flocking to U.S. tech stocks due to the recent bull market and heightened expectations for growth in the AI and semiconductor industries,” noted Han Ah-reum, a researcher at the Korea Capital Market Institute, adding that such a tendency is likely to continue for a while.

“Securities firms are likely to face intensified competition to attract new customers in overseas stock-trading services, which will lead to a more diverse range of products and services,” said Han.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]