South Korean brokerage stocks, once key beneficiaries of a first-half market rally, have given back much of their gains as trading value and client cash indicators fell in July. Year-to-date gains for major brokers have sharply narrowed, with Kiwoom Securities turning negative. While second-quarter operating profit improved at several firms, the outlook for the second half hinges on non-brokerage businesses such as wealth management and funding operations, amid softer trading momentum and persistent sector rotation.

A surge in South Korean stock market turnover is making securities subsidiaries a key earnings driver for financial holding companies. Average daily turnover in the second quarter is estimated at 89.6 trillion won, up 28.6 percent from the first quarter, with May topping 100 trillion won for the first time. Brokerages are expected to post sharp profit gains, supporting non-interest income. Risks include bond valuation losses, higher credit costs and tighter rules on single-stock leveraged products.