SEOUL, Apr 17 (Reuters) Samsung Securities Co., South Korea's most valuable brokerage, is set to rebound to a quarterly profit from a year ago loss and double earnings from the previous quarter on trading growth and an expansion intoasset management.
Samsung Securities' focus on investment banking may also have paid off in the January-to-March quarter, thanks to its part in two of the three biggest initial public offerings (IPOs) of the year.
The investment house's outlook appears brighter still, having finalised in March payments from past investment lossesthat left its earnings trailing rivals in the past.
''Their income from asset management and investment banking should have continued to rise,'' said Stan Lee, an analyst at Goodmorning Shinhan Securities.
''One of the notable trends for the past quarter has been that their market share (in trading) should have increased,'' he said.
''Their focus on foreign investors is paying off.'' Samsung Securities is set to announce on Wednesday a net profit of 71.7 billion won (.12 million) in its fiscal fourth quarter, according to a Reuters survey of nine analysts.
It saw a 3.5 billion won loss a year ago, hit by costs from job layoffs, and a 34.7 billion won profit in the prior quarter.
Operating profit for the reporting quarter is seen at 97.7 billion won.
Among rivals, Woori Investment and Securities Co. earned a net 60.3 billion won in the January-to-March quarter, while Daewoo Securities Co. earned 115.7 billion won, according to Reuters calculations.
Samsung may have expanded its market share to a little above 8 percent of the country's trading from around 7.7 percent in the previous quarter, as the proportion of trade from foreign investors rose to around 22 percent from 18 percent.
ASSET MANAGEMENT AND FOREIGN TRADING Samsung has focused on trading for foreign institutional investors, which yields higher commissions and is more stable than trading from domestic retail participants.
Average daily trading on South Korea's stock market was 6.78 trillion won in the fiscal fourth quarter, up 57 percent from 4.33 trillion won a year earlier.
Brokerage shares have fallen sharply after trading volumes dipped in the past couple of months, with some investors worried that trading will cool after the main KOSPI index's 54 percent jump in 2005.
Samsung's shares fell 16.3 percent in the January-to-March quarter, compared with a 1.45 percent fall in the main index.
The sector is expected to benefit from government plans to make it easier for brokerages to expand into asset management.
Sales of funds developed by units such as Samsung Investment Trust Management have risen, with clients' assets reaching 105 trillion won by the third quarter.
Investment banking is also gaining in importance.
Samsung was the lead manager for the 0 million IPO of Mirae Asset Securities Co. in February, and one of the underwriters for 4 million listing of Macquarie Korea Infrastructure Fund in March.
Samsung will register an estimated 38.1 billion won in costs related to past investment losses, although that amount could be offset by an estimated 35 billion won in tax credits.
The payment, combined with the completion of the 2000 purchase of an investment trust unit in November, cost Samsung an estimated 120 billion won in the past fiscal year.
REUTERS CS ND1230