Securities Sector - 9M2023 Update

Securities firms’ profitability recovered in 9M2023 from trough levels in 2022, mainly driven by investment income (+153% yoy) following the recovery in stock market valuations. Other core businesses - margin lending and brokerage - remained weaker than the prior year given limited market trading activity during 6M2023. Several firms increased holdings of risky corporate bonds, and recent capital injections provide buffer against asset risks and potential losses. We expect securities firms’ profits will gradually improve primarily from stronger stock trading activity amid improved sentiment around the economic outlook for 2024.