Lacking a Localization Strategy
Foreign securities companies in South Korea are showing a rapid decline in profitability in the absence of localization strategy.
For example, Deutsche Securities Korea’s net profit dropped from 1,330.66 million won to negative 7,975.72 million won last year, when its operating loss amounted to 5,872.71 million won. Daiwa Securities Korea posted an operating loss of 1,893.77 million won and a net loss of 1,641.88 million won in 2019 after the respective figures totaled 1,229.24 million won and 803.36 million won in 2018. HSBC Korea’s operating profit dropped 58.98 percent to 925.76 million won in 2019 and its net profit fell 22.31 percent to 792.34 million won that year.
Not all foreign securities companies were sluggish last year. For instance, Credit Suisse Korea’s operating profit and net profit added up to 88,004.34 million won and 68,148.21 million won and those of JP Morgan Korea totaled 69,619.92 million won and 52,989.28 million won.
Likewise, Morgan Stanley Korea’s figures reached 46,383.88 million won and 37,507.89 million won, Nomura Securities Korea’s reached 46,083.83 million won and 33,158.47 million won, and Macquarie Securities Korea’s totaled more than 800 million won each. These companies made much effort for business diversification last year.
In contrast, Deutsche Securities Korea and HSBC Korea had no specific localization strategy last year. “Foreign securities companies without localization strategy are likely to fail to increase their presence in the South Korean market in that South Korean securities companies are getting bigger and bigger and getting more and more competitive and competition in the market itself is continuing to intensify,” an industry expert pointed out.