Securities losses pile up for investment advisory firms

Investment advisory firms in Korea saw their earnings slump 56.8 percent in fiscal 2011 from a year earlier due to increased losses from investments in securities and derivatives, the financial regulator said yesterday.
The combined net income of 144 local and foreign investment advisers operating here reached 37.9 billion won ($32.6 million) in the fiscal year ending March, compared with 87.7 billion won a year ago, according to the Financial Supervisory Service (FSS).
The fall marked the first downturn since 2009, when their bottom lines swung to the black from a 30.3 billion won net loss in the previous year.
The tumble in earnings was attributed to increased operational costs resulting from losses due to investments in securities and financial derivatives.
The combined operational cost of the advisory firms jumped 21.9 percent on-year to 294.2 billion won in fiscal 2011 as they lost 43.1 billion won in securities and derivative investments, the watchdog said.

As of end-March, the investment advisers’ combined assets totaled 702.9 billion won, down 26.3 billion won from a year earlier, while their combined equity capital slipped by 3.7 billion won to 618.4 billion won, according to the FSS. Yonhap