Korean brokerages, tax coffers earn big from retail stock fad in 2020

2021.02.22 13:43:26 | 2021.02.22 13:44:19

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South Korean brokers and government benefited big from retail stock fad last year.

According to Korea Financial Investment Association on Sunday, Korea’s five major brokerages with 5 trillion won ($4.5 billion) or more in equity capital – NH Investment & Securities, Mirae Asset Daewoo, Samsung Securities, KB Securities, and Korea Investment & Securities – paid 144.72 million won in average monthly salary to employees last year, up 19 percent from 122.06 million won the previous year.

The fatter paycheck comes as brokerage firms enjoyed their best-ever year after the main Kospi reached new heights amid retail stock fever.

In the final trading session of 2020, the main Kospi closed at a record 2,873.47, up 31 percent from the previous year’s final closing at 2,197.67.

Samsung Securities raised 677.9 billion won in operating profit last year, up 31 percent from the previous year, on sales of 11 trillion won, up 65.3 percent. Kiwoom Securities also saw its operating profit more than double last year from a year ago to 954.9 billion won. The brokerage gave out thick bonuses – 450 percent of basic pay – to its employees in January.

Foreign brokerages rewarded their employees with more than 300 million won in annual compensations.

The average wage at Morgan Stanley was 370.53 million won while at Merrill Lynch 300.8 million won, and Goldman Sachs 314.79 million won.

Some of the local houses also paid more than 200 million won to its employees last year.

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Workers at Meritz Securities received 231.21 million won in average annual pay last year, up 29 percent from the previous year. The average annual wage at KTB Investment & Securities reached 220.99 million won, Kakaopay Securities 203.47 million won, and Hi Investment & Securities 200.74 million won. Even small-scaled Bookook Securities paid 361.2 million won in annual wage to its employees last year.

Securities firms also reaped nearly 1 trillion won in interest from margin accounts last year as retailers leveraged on borrowing for stock trade.

Stock turnover averaged record high of 42.1 trillion per day last month, gaining 25 percent from December as trade in Kospi blue chips increased, said Kang Seung-gun, an analyst at KB Securities.

The stock fever has translated into big tax gain for the government, helping to offset losses from slumped corporate taxes.

According to tax settlements from the Ministry of Economy and Finance, the government’s revenue from securities exchange reached 8.76 trillion won last year, nearly doubling from 4.47 trillion won in 2019 and up 40 percent from 6.2 trillion won in 2018.

Investors pay 0.25 percent in tax for each stock trade.

The government collected 16.7 trillion won less in corporate tax last year from a year ago due to weakened earnings amid Covid-19. It also saw customs duties go down 800 billion amid slowed imports. But capital gain tax increased by 7.6 trillion won and stock trade tax by 4.3 trillion won last year.

By Kim Jung-beom, Yang Yeon-ho, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]