[Edaily Reporter kyoungeun kim ] On the 21st, Shinhan Investment Securities maintained its “Overweight” investment rating for the securities sector but lowered earnings estimates and target prices across the board for the stocks it covers. This decision stems from the assessment that third-quarter earnings will fall short of market expectations due to a sharp decline in stock market trading volume and the prolonged slump in the investment banking (IB) sector.

Lim Hee-yeon, a research analyst at Shinhan Investment Securities, said, “We expect earnings consensus to be revised downward amid an unfavorable business environment,” adding, “Despite high dividend yields, a conservative approach remains valid until earnings uncertainty is resolved.” She named Meritz Financial Group(138040)as her top pick.
According to the report, the KOSPI index remains at the 6,715 level, down 20.8% from the end of the previous quarter. Average daily trading volume (including exchange-traded funds, or ETFs) plummeted from 138 trillion won in June to 100 trillion won in July, 67 trillion won in August, and 56 trillion won in September. Cumulative daily average trading volume for the third quarter was 77 trillion won, a 34% decrease from the previous quarter, while customer deposits (100 trillion won) and margin balances (33 trillion won) also fell by 18% and 11%, respectively. Research Fellow Lim explained, “MoneyMove from the stock market to bank deposits is accelerating.”
The investment banking (IB) sector is also underperforming. Public offerings of corporate bonds by general corporations recorded net redemptions for nine consecutive months through August of this year, and from the beginning of the year through September, 43 companies went public (IPO), raising 1.6 trillion won—down 35% and 53%, respectively, compared to the same period last year. Trading profits were also expected to be weak due to rising interest rates.
Most estimates for third-quarter net income attributable to controlling shareholders fall significantly short of the consensus. Shinhan Investment Securities projected the following figures: MIRAE ASSET SECURITIES(006800) at 16.1 billion won (-91.1% vs. consensus), KOREA INVESTMENT HOLDINGS(071050) at 263.6 billion won (-61.3%), NH INVESTMENT & SECURITIES(005940) at 301.3 billion won (-25.1%), SamsungSecurities(016360) at 319.2 billion won (-23.5%), and KIWOOM Securities(039490) at 352.1 billion won (-13.2%).
Consequently, target prices were also lowered. MIRAE ASSET SECURITIES lowered its target price by 26% to 37,000 won; KOREA INVESTMENT HOLDINGS (250,000 won) lowered its target by 17%; NH INVESTMENT & SECURITIES (34,000 won) and SamsungSecurities (110,000 won) each lowered their targets by 15%; and KIWOOM SECURITIES (360,000 won) lowered its target by 14%. All firms maintained their “Buy” investment ratings.
Looking at individual stocks, MIRAE ASSET SECURITIES is estimated to recognize an impairment loss of approximately 440 billion won related to SpaceX and is preparing relevant hedging measures. KOREA INVESTMENT HOLDINGS is expected to reflect valuation losses on assets held by its affiliates and plans to secure up to 500 billion won in liquidity through the selection of a preferred bidder for KDB Life Insurance and the issuance of corporate bonds in October. SamsungSecurities’ sensitivity to profit and loss from rising interest rates is limited due to its small bond book, while KIWOOM Securities is expected to partially offset the decline in commission revenue through securities lending and swaps.