Domestic securities firms' report issuance, showing signs of revival after ten years... Competition in research is becoming increasingly fierce

Last year, China’s domestic stock market surged significantly, and the issuance of corporate analysis reports by securities firms—which had previously declined—once again shifted to a clearly upward growth trend. As trading volume increased and individual investors’ information needs expanded, securities firms began to publish investment views on individual stocks and industries more actively.

According to FnGuide statistics, in 2016 the number of reports issued by domestic securities firms was 20,945. This figure rose to 21,608 in 2017, but afterward it showed an overall downward trend. In particular, in 2022, when the COVID-19 pandemic caused greater market uncertainty, the number of reports fell to 15,384, the lowest level in nearly a decade. However, after rebounding to 16,420 in 2023, the figure exceeded 20,000 again in 2024, reaching 22,978 last year—effectively returning to the level from ten years ago.

The background to this change is a more active stock market. Last year, the Korea Composite Stock Price Index increased 76%, and the KOSDAQ index rose 36%, indicating a strong uptrend. The trading value in the securities market also grew from about 2,621 trillion won to 3,001 trillion won, up 15%. As participation in the market became more active, demand for information such as forecasts of corporate performance and industry prospects, as well as target stock prices, also increased. In the past, people used to think that the contribution of research reports to returns was relatively low compared with the costs. But in the financial investment industry, the view is that since last May—along with the rise in stock prices—retail customers, meaning individual investors, have increased rapidly, and the demand for corporate information has truly expanded. Analysts point out that individual investors also tend to refer to corporate analysis materials rather than making investment decisions solely based on capital flow.

From the perspective of each securities firm, last year Korea Investment & Securities issued 1,363 reports, the most. Next were Hanhwa Securities with 1,359 reports, NH Investment & Securities with 1,321, Shinhan Investment with 1,272, Samsung Securities with 1,235, Kiwoom Securities with 1,208, KB Securities with 1,112, and Daishin Securities with 1,073. Judging only by growth rate, Kiwoom Securities grew 43% within one year, showing the most rapid expansion. In contrast, Sangsangin Securities decreased 20%, SK Securities decreased 19%, Kyobo Securities decreased 14%, FIl-Research (Daewoo) Securities decreased 11%, Hyundai Motor Securities decreased 9%, HanYang Securities decreased 6%, and Mirae Asset Securities also decreased 4%. This indicates that even under the same market environment, each securities firm differs in how it deploys its research personnel and its strategic priorities for research.

The focus of the companies covered in the reports is also gradually changing. The share of reports on companies listed on the KOSDAQ increased from about 22% in 2016 to 26% in 2024, and it was maintained at a relatively high level of 24% last year as well. This can be seen as a result of the market’s continued attention to growth stocks and mid- to small-cap stocks. This trend may continue this year too. As of April 27, the number of reports issued was 7,783, of which reports on companies listed on the KOSDAQ totaled 1,913, accounting for about 25%. In the same period, in terms of the number of reports issued by each securities firm, NH Investment & Securities issued the most with 492, followed by Hanhwa Securities with 484, Samsung Securities with 478, Shinhan Investment with 473, Korea Investment & Securities with 402, Kiwoom Securities with 394, and KB Securities with 366. According to the Korea Financial Investment Association, as of April 30 there were 1,071 financial investment analysts affiliated with securities firms, of which NH Investment & Securities had the most with 86, followed by Samsung Securities with 70, Shinhan Investment with 67, and Korea Investment & Securities with 64. With stock market trading and individual investor participation staying active, this trend may further stimulate competition in the research field in the future. However, beyond competing solely on quantity, it seems that the quality of analysis that actually helps with investment decision-making will become even more important.