Active investment decreases due to domestic stock market recession
This year’s share of stocks 4.4%P, bonds 2.9%P↓
Investment in overseas assets increased by 3.2% in stocks.
There is still a value increase effect due to the decline in growth potential.
Discrimination in domestic and overseas markets is expected to continue for the time being
Seoul Yeouido Securities District. Seoul Economic DB
As the Korean capital market fell into a particularly slump this year, unlike other countries, public funds investing in domestic assets were found to protect returns by reducing the proportion of stocks and bonds and increasing deposits. On the other hand, domestic public funds that invest in overseas assets are adopting a contrasting strategy by aggressively investing in both stocks and bonds instead of reducing deposits.
According to the Korea Financial Investment Association on the 16th, the proportion of stocks and bonds among all investment assets of domestic public offering funds this year was 26.65% and 23.46% as of the 11th, down 1.75% points and 3.08% points, respectively, from 28.40% and 26.54% at the end of last year. did it During this period, the proportion of call loans (ultra-short-term money loans) also decreased from 1.46% to 0.97%, and commercial paper (CP) remained the same at 12.29%. The only investment assets whose proportion increased were deposits and other assets such as raw materials, which increased from 5.02% and 26.47% to 5.77% and 30.85%. This means that while reducing investment in stocks and bonds, funds were concentrated on assets unrelated to investment, such as deposits.
Moreover, this phenomenon has been intensifying more rapidly recently. According to the Korea Financial Investment Association, the proportion of all domestic public offering funds incorporating stocks and bonds remained at 27.18% and 24.46% until the end of last month, but fell by 0.53% point and 1.00% point in 6 trading days this month. Instead, only the proportion of deposits and other assets increased by 0.05% point and 1.57% point from 5.72% and 29.28% during the same period.
What stands out is that public funds that invest in domestic assets are leading this phenomenon. According to the Korea Financial Investment Association, the share of stocks in public funds investing in domestic assets plummeted from 24.10% at the end of last year to 19.66% on the 11th of this month, and the share of bonds from 32.65% to 29.68%. In the case of stock investment assets, while the total assets of domestic investment public offering funds increased from KRW 280.2055 trillion to KRW 337.6499 trillion, the amount itself also fell behind from KRW 67.5256 trillion to KRW 66.3751 trillion.
Unlike stocks and bonds, the proportion of deposits in domestic asset investment public offering funds rose vertically from 5.54% at the end of last year to 6.87% at the end of last month and 6.98% on the 11th of this month. The proportion of other assets also increased from 20.32% at the end of last year to 23.74% at the end of last month and 25.91% on the 11th.
On the other hand, the opposite phenomenon occurred in domestic public funds investing in overseas assets. The proportion of stock and bond assets in overseas investment public offering funds increased from 42.95% and 5.84% at the end of last year to 46.21% and 6.08% on the 11th. The proportion of deposits and other assets plummeted from 3.27% and 47.29% to 2.39% and 44.65%, respectively.
Experts pointed out that active investment by public funds is decreasing due to the decline in the basic strength of the Korean economy, such as corporate performance and future growth potential. It was also diagnosed that the interest rate cut trends in Korea and the United States are being interpreted differently from the perspective of investment opportunities for institutional investors due to differences in short-term and long-term capital returns and stock price directions. Many experts believe that it is difficult to expect the effects of corporate value improvement (value up) policies and inclusion in the World Government Bond Index (WGBI) right away, and predict that the fund’s discrimination in domestic and foreign assets will continue for the time being. Lee Jae-won, a researcher at Shinhan Investment & Securities, said, “The U.S. stock market has broken new highs amid expectations of good corporate performance, and investment funds are also flowing into the Japanese and Taiwanese stock markets, but only the KOSPI index is showing a box-bound trend like a loner.” He added, “Amid a lack of foreign and institutional buying momentum. “There is no incentive for the transaction amount to increase again,” he pointed out. Cho Yong-gu, a researcher at Shinyoung Securities, analyzed, “The short-term impact will not be significant as the inflow of funds due to WGBI incorporation is likely to occur starting next year.”
