The stock market sees 100 trillion won a day ... a tailwind for brokerage stocks

As the average daily trading value in South Korea's stock market surpassed 100 trillion won for the first time ever, expectations are rising for stronger earnings at brokerage stocks. With investor money flowing into Samsung Electronics and SK hynix, trading has surged not only in stocks but also in single-stock exchange-traded funds (ETFs).
According to the brokerage industry on the 3rd, average daily trading value in the domestic stock market in May came to 106.2 trillion won, up 56.6% from the previous month. The figure, which combines 65.8 trillion won in trading on the Korea Exchange (KRX) and 40.4 trillion won on Nextrade (NXT), marked an all-time high. Average daily trading value including ETFs reached 136.6 trillion won.
Trading value in the stock market also rose 59.0% from the first-quarter monthly average of 66.6 trillion won. Compared with last year's monthly average of 26.2 trillion won, it more than quadrupled.
The growth in the ETF market was even steeper. Last month, average daily ETF trading value jumped 84.0% from the previous month to 30.4 trillion won. In particular, after 16 single-stock leveraged and inverse ETFs based on Samsung Electronics and SK hynix were listed on the 27th of last month, average daily ETF trading value over the most recent three trading days expanded to 41 trillion won.
Trading was active not only in the domestic market but also in overseas stocks. In May, overseas stock trading volume reached $60.5 billion, up 20.5% from the previous month. That is also above last year's monthly average of $55 billion. However, as net selling continued for a second straight month, profit-taking was also detected in some growth stocks, including Tesla, NVIDIA and Palantir Technologies.
As investor enthusiasm grew, margin lending also increased. Credit trading balances in May rose 3.8% from the previous month to 37.1 trillion won. On the 29th of last month, they even topped 38 trillion won.
The brokerage industry said the rise in trading value and the expansion of the ETF market are likely to translate into stronger earnings for securities firms. It expects gains not only in brokerage fee income, but also in asset management revenue and trading profits tied to ETF liquidity providers.
If the current trading trend continues, brokerage-related profits at securities firms in the second quarter are expected to rise 20% to 30% from the first quarter. Some firms could even come close to last year's full-year earnings with just first-half profits this year.
KB Securities analyst Kang Seung-geon said, "Last month's trading value surpassed 100 trillion won, and ETF trading also surged," adding, "Brokerage-related profits in the second quarter will rise sharply from the first quarter."
Meanwhile, the KRX Securities Index fell 4.3% last month, underperforming the KOSPI by 32.8 percentage points over the same period. The sector lagged as funds concentrated in semiconductor and AI-related stocks.
Ko Yeon-su, an analyst at Hana Securities, said, "As the domestic stock market shows solid earnings growth led by the semiconductor sector, trading value in domestic stocks and ETFs is also expected to remain above forecasts. The securities sector is in a phase where it can expect both higher brokerage income from rising trading value and improved WM and trading results from ETF market growth."
dschoi@fnnews.com Choi Du-seon Reporter