S Korea's Samsung Sec says Q3 profit falls

SEOUL, Jan 30 (Reuters) South Korea's Samsung Securities Co. reported on Tuesday an unexpected fall in quarterly profit from a weak year-earlier period as retail investors traded less and as sales of financial products slowed.

Fiscal third-quarter earnings at brokerages have been knocked back from the booming stock markets of a year earlier, as retail investors, who power profits in the sector, continue to migrate to professionally-managed mutual funds.

These investors are switching to funds focused on stronger overseas markets, many of which have been developed by foreign asset managers and are sold mainly via banks, leaving domestic brokerages trailing in an increasingly popular market segment.

Samsung Securities' profit outlook is thus uncertain and has been made worse by the KOSPI <.ks11> stock index posting the weakest performance in the region this year. The South Korean benchmark index is en route to its worst January since 2003, with trading volumes falling even further.

Samsung, South Korea's most valuable brokerage, earned 32.7 billion won (.78 million) in the October-December quarter, widely missing a median consensus forecast of 46.3 billion won from a Reuters survey of seven analysts.

The result was 5.7 percent lower than last year, when earnings had been hit by pension-related one-off costs, and also 23.5 percent lower than the preceding quarter.

Daewoo Securities, which has the biggest market share with around 8 percent of the country's stock trading, said net profit in the same quarter reached 66.1 billion won, down 58.2 percent from last year.

The results also missed a median forecast of 76 billion won.

Combined average daily trading value in the October-December period for the KOSPI and the junior Kosdaq <.kq11> dropped 32.3 percent to 4.6 trillion won from the same period of 2005, a year in which the main index scored a record-setting 54 percent surge.

Brokerages also faced slowing sales growth of domestic mutual funds, with investors preferring to invest in mutual funds that target booming overseas markets such as China, which has hit a record this year.

Samsung Securities shares fell 5.8 percent in the October-December quarter, compared with a 4.6 percent gain in the KOSPI.

REUTERS PV HS1735