The securities sector has recorded the highest growth rate among all sectors over the past two months, as it is cited as a beneficiary sector of the new government’s policies. However, there are opinions that while policy effects take time, stock prices have surged sharply in a short period, raising the possibility of adjustments.
According to the Korea Exchange on the 9th, the KRX securities index rose by 54.15% from April 7 to May 5. During the same period, it surpassed the KOSPI index growth rate (20.8%), showing a significant gap when compared to the KRX construction index (36.7%) and the KRX utility index (35.2%), which also had high growth rates.
Among 21 listed securities firms, Mirae Asset Securities showed the most notable stock price increase. Its closing price jumped from 8,770 won on April 7 to 17,820 won on May 5, more than doubling. Following that, Sangsangin Investment & Securities increased by 99%, Shinyoung Securities by 69.2%, BOOKOOK Securities by 68.3%, Korea Investment Holdings by 67.3%, and Eugene Securities by 62.3% during the same period.
All presidential candidates, including President Lee Jae-myung, have pledged to revitalize the stock market, leading to a surge in stock prices for the securities sector. Following the inauguration of the new government, the securities sector continued to be regarded as a beneficiary sector. This is because amendments to the Commercial Code, the push for inclusion in the Morgan Stanley Capital International (MSCI) advanced index, and the encouragement of stock buybacks are expected to help stimulate the stock market.
The scale of transaction value, which can indicate the brokerage revenue of securities firms, is on the rise. In May, the average daily transaction value of the domestic stock market reached 20.2 trillion won, which is a 9.1% increase compared to the first quarter of this year (January to March). The average monthly transaction value for overseas stocks this year is also maintaining a level about 14.7% higher than last year.
The issue is that the stock prices of securities have risen sharply while key indicators are exceeding average levels. For example, the average price-to-book ratio (PBR) of the securities sector over the past five years was 0.42, while currently it is 0.51.
Comparing the average PBR over the past five years for each securities firm with the current PBR, Mirae Asset Securities rose from 0.46 to 0.86, Kiwoom Securities from 0.69 to 0.83, NH Investment & Securities from 0.53 to 0.76, Samsung Securities from 0.57 to 0.75, and Korea Investment Holdings from 0.54 to 0.69.
Conversely, the key indicator of the investment attractiveness of securities, the dividend yield, has decreased from an average of 4.9% over the past five years to the current 3.8%. Daishin Securities and Hanyang Securities, whose five-year average dividend yield had exceeded 8%, have also dropped to 4.95% and 5.76%, respectively.
A key policy that has lifted the stock prices of financial stocks, including the securities sector, is the separate taxation of dividend income, yet its implementation remains uncertain. While the stock prices of securities firms surged in a short period due to policy expectations, there are suggestions to keep in mind the possibility of adjustments, considering the time needed for actual policy execution.
Kang Seung-geon, a researcher at KB Securities, noted, “While we positively assess the new government’s interest in the capital market, considering that discussions regarding dividend income tax need to be further developed, we advise to take trading action in the medium term by confirming the policies rather than responding to short-term surges.”