South Korean securities industry faces third-quarter downturn

South Korean securities firms are projected to face a significant downturn in the third quarter, following a strong performance in the first half of the year. The industry is grappling with a dual challenge: declining transaction volumes and rising interest rates.

Brokerage revenues are expected to drop as daily average trading volumes on the KOSPI have hit yearly lows. Analysts predict that major firms, including Samsung Securities, Mirae Asset Securities, and NH Investment & Securities, could see a nearly 40% decrease in commission income. Additionally, rising market interest rates are expected to worsen trading and other profits by approximately 44.7% compared to the previous quarter due to falling bond valuations and increased funding costs.

The investment banking (IB) sector is also seeing a slowdown, with corporate bond issuances and IPO amounts decreasing significantly compared to the previous year. Experts suggest a 'high in the first half, low in the second half' trend for the industry as market vitality fails to return to previous levels.