Trading value plunges 64%, yet stocks are ‘near the bottom’... Is there enough basis for a rebound in brokerage stocks?

[Financial News] With domestic stock market trading value down 64% from its peak, the securities industry has raised the possibility that brokerage stocks may be entering bottom territory. A key basis is that the trading value turnover ratio has fallen to levels seen before the bull market.
Ahn Young-jun, an analyst at KIWOOM Securities Co., Ltd., said on the 27th, “Valuation, shareholder return yield and the stock market’s trading value turnover ratio, among other factors, allow us to infer that stock prices underpinned by fundamentals have come sufficiently close to bottom territory.” He maintained an “Overweight” rating on the securities sector.
The decline in trading value is pronounced. Through the fourth week of October, average daily trading value on the domestic stock market was 38.7 trillion won, down about 3% from 40.1 trillion won in September. Compared with the record 106.2 trillion won in May, the decline amounts to 64%. Although the figure is higher than last year’s average daily trading value of 26.3 trillion won, it is difficult to view this as a sign of a recovery in trading.
Analyst Ahn explained that investors should look at turnover relative to market capitalization rather than the absolute amount of trading value. “That’s because the larger the market capitalization, the greater the illusion that trading value is higher,” he said, adding, “It is more reasonable to use the turnover ratio as the basis for analysis.”
Over the past 10 years, the domestic stock market’s trading value turnover ratio has ranged from 100% to 400% on an annualized basis, with an average of around 200%. Recently, it rebounded from 162% in September to 190% in October. Analyst Ahn said, “Trading value has now fallen to levels seen in a normal market, rather than a bull market,” adding, “It can be judged that there is little room for further decline.”
[email protected] Choi Doo-seon Reporter