President Ryu Sang-ho of Korea Investment Securities Co.

Korea Investment and Securities Co. (KIS) will go ahead with a plan to invest 450 billion won in its subsidiary in Hong Kong to boost its capital by issuing new shares in a bid to upgrade its operation as a global investment concern, the company said on Oct. 19.

When the new shares are issued successfully, the capital of its Hong Kong subsidiary will be boosted to $410 million from $10 million. The subsidiary will set up its global trading center before launching its global investment drive by steps, the company said.

Vice Chairman Kim Nam-koo has great confidence that the group will base its overseas operation anchored in Hong Kong by boosting the capital of its local subsidiary.

The confidence in the financial group’s overseas operation is based on its experience operating in Vietnam for over a decade with a great success, as well as a number of years in Indonesia.

The vice chairman declared that the group’s major overseas operation will be in southeast Asia in a speech he made the group’s employment explanation session held at Seoul National University.

He brushed off concerns that financial crises in emerging financial markets like those in Venezuela could contaminate the Asian financial market by stressing that Asia is the fastest growing region, and the region has a very bright future.

The Hong Kong subsidiary will be Korea Investment Securities Co.’s largest branch - a major affiliate of Korea Financial Holdings. The Vietnamese subsidiary has a capital of 90 billion won while that of Indonesian subsidiary amounts to 42 billion won.

KIS judiciously planned the strategy for its Hong Kong subsidiary’s operation in launching the group’s global operation which is centered around the Financial Center in Hong Kong.

The strategy has the Hong Kong subsidiary kicking off its operation after its capital has been boosted with the investments in the property trading including stocks, bonds and derivatives and managing the ELS hedge funds before expanding into more lucrative areas such as replacement investment, IB deal sourcing and other areas.

Hong Kong has been sought after as one of the top financial market in the world due to its close accessibility to China’s financial market and being ranked as the 4th in the Global Competitive Financial Market Index announced by World Economic Forum for financial market development factors.

The Korean securities firms operating in Hong Kong secured $1.5 million in profit in 2016. Mirae Asset Daewoo was the first Korean securities firm to kickoff its operation in Hong Kong in 1994 by setting up its subsidiary followed by NK Securities in the same year.

Other securities firms including Samsung Securities, Shinhan Financial Investment and KB Securities followed them later by either setting up subsidiaries or rep. offices, to make the number of Korean securities firms operating in Hong Kong to 10.

But they have not been doing very well with the competition getting so tough with the top rated global IB firms competing for pieces of business. A number of Korean securities firms including Samsung Securities pulled out of Hong Kong, which was followed by Hyundai Investment Securities closing down its operation in Hong Kong.

Chairman Park Hyeon-joo has been directly running Mirae Asset Daewoo’s operation in Hong Kong. But Daewoo Securities before its merger with Mirae Asset Securities did not do well in its Hong Kong operation.

Korea Investment and Securities was re-formed in June 2005 when the company was merged with Dongwon Securities. The previously named Korea Investment & Securities Co., Ltd. (KITC) was Korea’s leading distributor of investment trust products, mainly those of its wholly owned subsidiary; while Dongwon Securities was one of Korea’s main securities brokerages.

A view of the building where Korea Investment Securities Co. is located. (Photos: KIS)