S KOREAN CONGLOMERATES VYING TO TAP BROKERAGE SECTOR.

SEOUL, June 2 Asia Pulse - South Korean conglomerates that don't own brokerage houses are rushing to tap the securities sector in a bid to raise funds more easily, find new revenue sources, and manage their affiliates' assets more effectively, analysts say.

The moves by Hyundai Heavy Industries Co. (KSE:009540) and several others come as South Korean regulators are set to lift entry barriers in February of next year to raise the industry's competitiveness. The Lee Myung-bak administration, widely perceived to be business-friendly, is also moving to ease regulations that bar manufacturing companies from holding a controlling stake in banks.

"They are enticed by the prospect of having financial units -- especially brokerage houses and asset managers -- because they think the financial service business in the country has great potential to grow further," said Lee Ji-eun, an analyst at the Korean Institute of Finance.

That means that business groups will be able to diversify their revenue resources by moving into the securities sector, according to Lee.

Other analysts said that owning a brokerage house or having an asset manager will also help business groups raise funds easily and gain profits by arranging sales of stocks of unlisted affiliates and other companies.

Hyundai Heavy Industries, the world's largest shipyard, became the latest potential addition to the country's securities sector by signing an initial deal on Friday to take over CJ Investment & Securities Co., one of the nation's smaller securities firms.

The shipbuilder said the takeover will help effectively manage cash and cash equivalent assets held by its two units -- Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co. "We also expect the acquisition to help generate further revenue," the company said in a statement.