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| gettyimagesbank |
By Yoon Ja-young
The country's securities firms are losing investors' trust as their analysts are only recommending buying shares in their reports, while sell recommendations account for only 0.13 percent of the total reports.
According to Financial Supervisory Service (FSS) data submitted to Rep. Kang Byung-won of the main opposition Democratic Party of Korea, the country's 32 securities firms recommended selling certain company stocks only 32 times in their analysts' reports issued between 2017 and 2021. That is only 0.13 percent of the total reports issued. They recommended buying stocks of certain companies in 88.8 percent of the reports, while being "neutral" in 11 percent of the reports.
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This contrasts with foreign brokerages operating in Korea. Among the analyst reports on diverse companies foreign brokerages issued during the same period, they recommended buying in about half of the time, while recommending selling in 15.8 percent of cases.
As the local brokerages only recommend buying shares regardless of fluctuations in the market, there have been doubts over their credibility.
"Due to the war between Russia and Ukraine as well as the tension between the U.S. and China and the high interest rate, the market is facing extremely high uncertainty," the lawmaker said.
"The buy-only reports by securities companies in spite of these circumstances can hamper decision-making by retail investors. They are eating into the credibility of their own reports."
He urged the financial regulator to take more active measures to address the issue.
"The FSS had announced plans to enhance the credibility of the brokerage reports back in 2017 and 2019, but they were either superficial or ineffective. They should intervene more actively, such as by encouraging independent research as is done in other countries, or by recommending controlling the ratio of sell or buy recommendations."
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