(LEAD) Brokerage firms rallying on hopes for more money inflows, bullish run

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By Park Sang-soo

SEOUL, Aug. 28 (Yonhap) -- South Korean brokerage houses, led by Samsung Securities Co., traded near their record highs on Thursday on expectations that eased rules on corporate retirement pension operations would help pump more money into the local stock market, analysts said.

Also, a bullish run on the stock market is fueling optimism that their earnings will improve down the road, they said.

A sub-index measuring market capitalization of brokerage houses traded on the main bourse declined 0.24 percent to close at 1,978.45 points after suring 5.1 percent the previous day. The index hit a yearly high of 2,022.10 points at one point.

Samsung Securities, the country's No .2 brokerage house in terms of market capitalization, fell 1.59 percent to 49,400 won after touching its yearly high of 50,800 won. Woori Investment & Securities Co., the No.3 brokerage house, advanced 0.42 percent to close at 11,950 won, and KDB-Daewoo Securities rose 1.71 percent to finish at 11,900 won.

On Wednesday, the country's finance ministry said all companies in Asia's fourth-largest economy are required to adopt a retirement pension plan by 2022, in a bid to help meet growing welfare costs.

South Korea introduced retirement pensions in 2005 for the first time. Currently, only 16 percent of 1.68 million companies have adopted the pension plan.

The ministry also eased rules on management of retirement pensions by allowing asset managers to increase pensions' exposure to risky assets such as stocks. Some 87.5 trillion won ($86 billion) in pension funds has been poured into financial assets such as bonds and stocks, data showed.

"Eased rules would help expand a base for stock investment," said Seo Bo-ik, an analyst at Eugene Investment & Securities. "Some brokerage houses with a strength in retirement pension management and high brand value will benefit."

The government plans to ease regulations related to retirement pension fund operation to allow companies to "strike a balance between safety and profitability" by investing in stocks and other riskier assets.

Under the plan, the ceiling of risky asset ownership for defined contribution-typed retirement pension programs would be raised to 70 percent from the current 40 percent, allowing for more investment in stock markets.

Analysts said such softened pension management rules would help funnel up to 10 trillion won into the local stock market. "A massive amount of money would flow into the market every month, which is a big boon for the market," said Kim Choong-won, an analyst at Meritz Securities.

Analysts said a continued upward move in the local stock market would also help brokerage houses renew their yearly highs.

The country's key stock index, the KOSPI, closed at 2,075.76 points on Thursday, nearing a yearly high of 2,082.61 points on July 30, aided by continued foreign buying and economy-boosting measures rolled out since July.

"A series of stimulus steps, combined with monetary easing and relatively sound economic fundamentals, would prod foreign investors to maintain their buying spree," said Kim Yoo-kyom, an analyst at LIG Investment & Securities.

sam@yna.co.kr
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