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South Korean brokerage firms have reported substantial profits in the first half of 2024, driven largely by a surge in transactions on U.S. stock markets. As Korean investors increasingly turn their attention to American equities, domestic brokerage firms have capitalized on this trend, offering services that cater to the growing demand for U.S. stocks.
The shift in investor focus is significant. Data from the Korea Securities Depository indicates that Korean investors’ net capital inflow into U.S. stocks reached $12.3 billion in the first four months of 2024, a dramatic increase compared to previous years. This surge has led to a considerable rise in the value of transactions, with the combined value of U.S. stock trades by Korean investors rising fourfold compared to the same period last year.
Brokerage firms have been quick to adapt, enhancing their services to attract more clients interested in U.S. stocks. Many firms have extended their trading hours to cover the full range of U.S. market operations, including premarket and after-hours sessions. This allows investors in Korea to trade U.S. stocks late into the night, accommodating the time difference. Additionally, firms have introduced competitive measures such as waiving commission fees and providing real-time stock quotes at no additional cost, which were previously only available to paying subscribers.
The profitability of these firms has been remarkable. Leading brokerages like Korea Investment & Securities and NH Investment & Securities have reported record earnings for the first half of 2024. This is largely due to the increased commission fees associated with foreign stock trading, which are significantly higher than those for domestic trades. Some brokerage firms have also invested in technology to enhance their offerings, including AI-driven market analysis and research report translations, to better serve their clients.