On June 5, the second day of the new administration, the KOSPI index surged for a second consecutive day, climbing back to the 2,810 level for the first time in 11 months. Observers attribute the rally to strong signals from the Lee Jae-myung administration indicating an aggressive fiscal expansion, as well as renewed expectations of a stock market revaluation. These were further fueled by the ruling Democratic Party’s reintroduction of a Commercial Act amendment that would limit controlling shareholders’ voting rights to 3% when appointing auditors. (Yonhap)
SEOUL, June 6 (Korea Bizwire) — South Korean brokerage stocks are soaring on renewed optimism over the new administration’s stock market revitalization agenda, fueling a dramatic uptick in leveraged retail investing.
But analysts warn that selective, fundamentals-based investment is now essential as market differentiation is expected to intensify.
According to data compiled by Yonhap Infomax, credit-based stock purchases — often dubbed “debt-fueled investing” or bit-too in Korea — have surged across major securities firms. Korea Financial Holdings’ [071050] margin loan balance jumped fivefold to 11.36 billion won as of June 5, up from 2.19 billion won at the end of 2024.
Mirae Asset Securities saw a similar spike from 5.8 billion won to 27.58 billion won in the same period, while Daishin Securities [003540] more than tripled its balance.
Other brokerages such as Hyundai Motor Securities [001500] and DB Financial Investment [016610] also posted credit balance growth of 410% and 274% respectively this year.
The rally comes amid heightened expectations that President Lee Jae-myung, elected earlier this year in a snap presidential election, will introduce aggressive market-boosting reforms. During his campaign, Lee repeatedly pledged to pursue amendments to commercial law with the aim of pushing the KOSPI to 5,000.
Broader factors are also at play. As U.S.-China tariff tensions reignite under a potential second Trump administration, defensive sectors like finance are gaining favor. Anticipated interest rate cuts in the latter half of 2025 are adding further tailwinds.
“The securities sector is experiencing peak momentum, driven by policy expectations around market revitalization and governance reform,” said Kim Jae-woo, a researcher at Samsung Securities.
The KRX Securities Index has soared 58.6% this year through June 5, outpacing the KOSPI’s 17.2% gain by more than threefold — the highest growth rate among sectoral indices. The index includes major players such as Mirae Asset Securities, Korea Financial Holdings, NH Investment & Securities, and Samsung Securities.
On June 5, the second day of the new administration, the KOSPI index surged for a second consecutive day, climbing back to the 2,810 level for the first time in 11 months. Observers attribute the rally to strong signals from the Lee Jae-myung administration indicating an aggressive fiscal expansion, as well as renewed expectations of a stock market revaluation. These were further fueled by the ruling Democratic Party’s reintroduction of a Commercial Act amendment that would limit controlling shareholders’ voting rights to 3% when appointing auditors. (Yonhap)
Experts see further upside potential for brokerage stocks, drawing comparisons to 2017, when the sector posted the highest returns following Moon Jae-in’s election during the aftermath of President Park Geun-hye’s impeachment. KB Securities notes the sector jumped 22.6% in the three months after Moon took office.
Yet some analysts warn the rally may have priced in much of the optimism already. With brokerage earnings expected to weaken in the second half, momentum could wane.
“Seasonal performance tends to soften in the latter half of the year,” said Lim Hee-yeon, analyst at Shinhan Investment Corp. “With lower overseas stock trading volumes than early 2025, the odds of year-over-year earnings growth are dimming.”
In this context, analysts emphasize the need to “separate the wheat from the chaff” by focusing on firms with strong capital bases and higher bond allocations. Lim recommends Korea Financial Holdings as a top pick, citing its scale and capacity to leverage capital, followed by Samsung Securities and Mirae Asset Securities.
Stock market (Image supported by Yonhap)
Jang Young-im of Hyundai Motor Securities also backs Korea Financial Holdings, calling it the sector’s “most fundamentally sound” player. She adds that Samsung Securities may gain additional momentum if it receives approval for its short-term bond issuance business in the second half of the year.
As optimism builds around capital market reforms, analysts caution investors not to chase momentum blindly, but instead to favor well-capitalized, bond-savvy brokerages positioned for policy-driven growth.
M. H. Lee (mhlee@koreabizwire.com)
