Korean Online Trading Reaches $47.17 Billion in August
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Online stock trading in Korea is growing at an explosive pace, accounting for 29 percent of the nation's stock trading in August, compared with 20 percent to 27 percent of the United States, according to the Korea Securities Dealers' Association.
Industry analysts predict that the online stock trading would expand to nearly 50 percent of the entire stock trading in Korea in the year 2000.
Of August's total stock trading through local brokerage houses, which amounted to 195.12 trillion won (US$162.6 billion), 56.61 trillion won (US$47.17 billion) worth of transactions were made online through the Internet and PC communications networks.
In particular, Sejong Securities saw its online trading reach nearly 80 percent of its stock brokerage. LG Securities and Daishin Securities lead the market with 46 percent and 38.91 percent of their brokerage services performed online during the month of August.
"The brokerage commission of cyber trading is only one-fifth that of ordinary trading, so a growing number of individual investors are concentrating on online trading," said Shin Hyun-Woo, head of the international department at Korea Securities Dealers' Association. "Particularly, investors in their 20s and 30s tend to enjoy using cyber trading." he added.
As online trading is gaining popularity, Daishin Securities and Sejong Securities even opened cyber branches, and some other companies are preparing for establishment of cyber securities firms.
Korea Technology Banking Corporation (KTB) will establish a cyber securities firm with a paid-in capital of 30 billion won (US$24.3 million) jointly with Samsung Corp. and Daou Technology. For this, KTB has already submitted its application for preliminary permission to the Financial Supervisory Commission (FSC) in August.
Company officials said that KTB will invest 22.5 billion won (US$ 18.2 million), Daou and Samsung will lay down 6.5 billion won (US$ 5.2 million) and 1.5 billion won (US$1.2 million), respectively, to set up the projected cyber securities company. The cyber securities firm will begin its brokerage service from this coming December, the officials said.
Also, NaraeMobile Telecom is preparing to establish a cyber stock brokerage, which will be capitalized at 15 billion won (US$12.1 million), by forming a consortium with domestic financial institutions and foreign investors.
An industry analyst pointed out that online stock brokerage will have to focus on diversifying their services to sharpen their competitiveness because the brokerage commission for online trading have dropped by 0.1 percentage point which is believed as the bottom line. He noted that competitive cuts in brokerage commission can no longer be used as a tool to attract more customers.