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[Herald Interview] Mirae Asset stands tall on Wall St. amid strong rivals

Korean firm’s NY head talks about stiff competition and raising profile

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Published : 2019-07-14 15:40
Updated : 2019-07-14 15:46

NEW YORK -- Located a few blocks north of the bustling Times Square on 7th Avenue Manhattan, a South Korean brokerage is standing its ground and making inroads in the bustling financial sector.

“It’s been nearly 25 years since our foray on Wall Street,” Mirae Asset Securities New York Office CEO Jae Ryu told The Korea Herald recently.

“The significance of having a foothold in New York is that the office helps us expand globally and build our brand image.”

But the fickle and hypercompetitive nature of Wall Street has also pushed the firm to keep up with rivals. 

Mirae Asset Securities’ New York office CEO Jae Ryu poses for a photo at the firm’s office on 7th Avenue Manhattan, New York, July 1. (Jung Min-kyung/The Korea Herald)

“It wouldn’t make sense to claim we have a formidable global investment banking business without making ourselves known here,” he said.

Mirae Asset NY has made significant progress over the years, venturing into unchartered financial territories and bolstering its strengths.

It reported a net income of 3.6 billion won ($3.1 million) last year, making profits after years of being in the red. The office contributed to parent company Mirae Asset Daewoo’s overall robust overseas earnings of 89.42 billion won, which more than doubled from 38.28 billion won on-year.

The performance has drawn attention as compatriot rival Samsung Securities’ profits in the Big Apple plunged to 541 million won from 3.1 billion won, in the same period.

“Most brokerages from Korea are focused on selling Korean stocks to US hedge funds and institutional investors,” Ryu said.

“We were facing losses because we raised about $2.5 million in capital starting in 2016 to invest in infrastructure and workforce. It’s inevitable to face losses given the situation, but now we are certain that it was a necessary step to take.”
 
A CGI of the TSX Broadway building in Times Square, set for completion in 2021 (L&L Holding Company)

As investment banking and prime brokerage services continue to raise their profile, Mirae Asset NY is also vying to provide an all-around and localized service for clients.

It was the first Korean brokerage to start a prime brokerage business in the US.

“We are trying to expand our prime brokerage services, which we launched in 2016. Qualifying for a portfolio margin account, which is overseen by the US Financial Industry Regulatory Authority, is among the goals, and we expect to get licenses by end-August,” Ryu said.

Portfolio margin refers to the modern composite-margin requirements that must be maintained in a derivatives account containing swaps, options and futures contracts. 

In January, Mirae Asset NY also got involved in real estate investments, as it extended financing for fixed-income securities worth $375 million to fund TSX Broadway, a property revamp project to build a 46-story building at Times Square.

TSX Broadway, a $2.5 billion hotel-and-retail redevelopment project, involves a landmark tower in Manhattan by renovating the century-old Palace Theater. The renovation is scheduled to be completed by 2021.

Outside its portfolio, a key characteristic that distinguishes Mirae Asset from other Korean financial institutions in the US, is its diversification of workforce suited for localization, according to Ryu.

The NY office employs around 65 employees, with the majority hired through the local human resources team. The business is divided into four parts, and at the moment, there is only one employee from the Seoul headquarters for each team.

“In order to understand and work well here, you need a local workforce,” Ryu said. 

(The Korea Herald)

Regarding other issues, such as the stock transaction tax cut in Korea and the US-China trade dispute that is continuing, Ryu was cautious.

Korea’s decision to lower the tax on securities transactions on key bourses by 0.05 percentage point took effect in late May.

“The decision to lower the tax could send a positive signal to the market, but in order for the market to become truly active, the products need to become more diverse and attractive. Creating a lucrative ecosystem that could lure investors to buy stocks that could benefit one another is very important,” he said.

On the uncertainties stemming from the US-China trade war, hesaid the volatile mood is expected to linger for a while, as US President Donald Trump is engaged in a one-upmanship with China, which he needs to play out smoothly in line with his reelection campaign.

In the midst of it all, Mirae Asset NY will continue to build its unique identity as a Korean firm adaptable to the US market, he noted.

“In Korea, it’s more about building relationships in deals, which provides a sense of stability. But institutions often face more variables here because clients are offered more attractive commissions and other benefits,” Ryu said.

“But that’s just the Wall Street way.”

By Jung Min-kyung (mkjung@heraldcorp.com)