Asiamoney Brokers Poll 2017: Best local brokerages

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Korea

Korea Investment & Securities

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Korea Investment & Securities (KIS) wins Asiamoney’s best local brokerage, best for overall country research and best for overall sales service in Korea in this year’s Brokers Poll. The firm says its ROE is the highest among local securities firms at 12.7% during the first half of the 2017 financial year.

The firm correctly predicted the stock market rally at the start of 2017, after six years of the local index trading in range. It bet the Korea Composite Stock Price Index (Kospi) would hit 2,260 points this year, an 11.5% rise since the end of 2016, raising that target to 2,600 a few months later. The index was trading at 2,523 by the end of October.

“The upbeat forecast was based on a favourable US economic outlook, which led us to raise Korea’s GDP growth forecast to 2.9% for 2017, and our conviction that IT companies, such as semiconductors, and exporters would see their profits swell,” Sung-Hwan Kim, head of the business planning division at KIS, tells Asiamoney.

Despite positive performance and good profit growth from companies in Korea, there has been no shortage of drama. Mounting anti-Korean sentiment in China due to the deployment of the THAAD anti-missile system and growing tensions between the US and North Korea have dampened market sentiment in the second half of the year.

KIS has also taken steps to cope with changing client demands, in particular the desire for more diversification away from just domestic stocks.

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Sung-Hwan Kim,
KIS
“To meet such demand, we pre-emptively bolstered our team of analysts and we now offer analysis of diverse assets from many countries,” says Kim.

The firm hired a total of 134 people during the first three quarters of this year. But despite new additions, KIS still manages to have the second-most loyal workforce among Korean securities houses: employees have been with the firm an average of 11.1 years, just less than Kookmin Bank, where employees average 12.2 years of service.

The firm plans to enter new businesses next year. A change in regulation will allow brokerages with more than W4 trillion ($3.65 billion) in owners' equity to enter the investment banking business, starting with the ability to issue short-term notes. The bank plans to make a push into that business, leveraging existing client relationships from its asset management franchise.

Foreign clients will also be an area to improve on. They make up just 1% of the equity brokerage’s clients by number, yet international business is 25% of KIS's total profits.

“Over the mid to long term, we hope to scale this weighting up to 50%,” says Kim.