South Korean brokerages collected nearly 1 trillion won ($707 million) in overseas equity trading commissions in the second quarter, even as retail investors — known locally as "seohak gaemi," or overseas-investing ants — offloaded foreign shares en masse. The surge was driven by a sharp rise in overall trading volumes.
Semiannual reports filed by nine major brokerages — Toss Securities, Mirae Asset Securities, Korea Investment Securities, Samsung Securities, NH Investment Securities, KB Securities, Kiwoom Securities, Shinhan Securities and Meritz Securities — show their combined overseas equity commission revenue totaled 943.2 billion won in the second quarter.
That marks a 60.7% increase from the 586.8 billion won the same nine firms earned in the first quarter, and represents a record high for the segment.
The nine brokerages accounted for roughly 90% of the industry's total overseas commission revenue in the first quarter. Applying that share to the second quarter, the sector as a whole is estimated to have surpassed 1 trillion won.
Toss Securities led the group, posting second-quarter overseas commission revenue of 219.3 billion won — a 76.4% increase from 124.3 billion won in the first quarter — becoming the first domestic brokerage to exceed 200 billion won in a single quarter in this segment.
Mirae Asset Securities earned 177.8 billion won, up 54.0% from 115.4 billion won. Kiwoom Securities and Samsung Securities also crossed the 100 billion won threshold for the quarter: Kiwoom reported 135.4 billion won, up 68.4% from 80.4 billion won, while Samsung posted 116.1 billion won, up 56.4% from 74.2 billion won.
The nine brokerages' combined overseas equity commission revenue for the first half of the year reached 1.5 trillion won.
The revenue gains came despite retail investors selling heavily into foreign markets during the second quarter, spurred by government policy measures including capital gains tax exemptions.
After recording net purchases of $10.64 billion on US markets in the first quarter, retail investors swung to net selling of $775.74 million in the second quarter.
Net selling on the Hong Kong market also expanded, rising from $233.76 million in the first quarter to $318.02 million in the second.
The shift to net selling is largely attributed to a government incentive — a 100% capital gains tax exemption for investors who repatriated overseas holdings into domestic stocks by the end of May. Yet even as investors sold, brokerage commission revenue climbed, because total trading volumes increased.
Retail investors' total trading volume on US markets — combining purchases and sales — came to $149.2 billion in the first quarter ($78.9 billion in buys, $68.3 billion in sells). In the second quarter, that figure rose 12.5% to $170.5 billion ($84.8 billion in buys, $85.6 billion in sells).
Combined trading volume on the Hong Kong market grew more than 30%, from $2 billion in the first quarter to $2.7 billion in the second.
With the domestic stock market losing momentum in the third quarter and overall brokerage earnings expected to fall short of second-quarter levels, firms are pinning their hopes on overseas equity commissions.
Retail investors have already swung back to net buying in the third quarter after the second quarter's net selling. Net purchases of US stocks reached $5.2 billion through Friday.
"As individual investors increase their overseas equity investments, overseas trading commissions — unlike before — are becoming a significant part of brokerages' revenue," an official at one of the firms said.
However, with the third quarter now past its midpoint, US market trading volume stands at $67.6 billion ($36.4 billion in buys, $31.2 billion in sells) — less than half the pace recorded in the second quarter.
gil@heraldcorp.com
