[Column] The 'KOSPI 4000 Feast' for the Uninvited

"Even with KOSPI at 4000, except for the top 10 asset management companies, many are left empty-handed."
Korea Composite Stock Price Index (KOSPI) at 4000. Judging by the numbers alone, this year has seemed like a celebration for the securities industry. The stock market has repeatedly set new record highs, and news headlines have been filled with words like 'bullish winds' and 'rallies.' However, a closer look inside the market reveals that many were not invited to this feast. A comment made with a bitter smile by an executive at a public offering fund management company I recently met was no different.
The first to feel the divide as domestic stock trading increased and the index soared were the securities companies. Large securities companies with ample capital saw the market rise as an opportunity to expand their business. They quickly diversified their revenue sources through products like promissory notes and Integrated Management Accounts (IMA). In contrast, small and mid-sized securities companies faced a different reality. With low retail recognition, they saw limited benefits from increased trading during the bull market, and their smaller capital made it difficult to pursue aggressive business expansion. The burden of Project Financing (PF) accumulated over several years continues to weigh them down. As a result, a rising index does not automatically translate to improved performance.
Following the flow of funds, this gap is also evident in the asset management sector. This year saw an unprecedented influx of investor money into the stock market, but most of it went to Exchange-Traded Funds (ETF) managed by large Asset Management Companies. As ETFs, which are easy to invest in and popular among investors, gained the spotlight, the presence of traditional Public Offering Funds faded further. Even now, smaller firms find it too late to launch ETFs due to a lack of capital and manpower compared to larger players.
The disparity between large and small companies is also reflected in recent statistics. According to the Financial Supervisory Service (FSS), in the third and fourth quarters of this year, the top 30 Asset Management Companies by net assets accounted for 80% of the industry's total net profit. Considering there are over 500 asset management firms in Korea, a significant number have effectively endured losses. Outwardly, the industry may appear to be thriving with capital inflows and a rising index, but for many, it has been a 'much-hyped feast' with little to enjoy.
Of course, the historic high of the KOSPI, driven by government policies and abundant liquidity, is a welcome development for the industry. However, the direct benefits of the bull market have reached only a select few. This does not mean the market is heading in the wrong direction, but a single index figure cannot fully explain the health of the market. While KOSPI 4000 is undoubtedly a significant milestone, we must not ignore the disparities beneath the surface.
nodelay@fnnews.com Park Ji-yeon Reporter