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THE INVESTOR
August 04, 2020
Big Reunion

Stocks & Bonds

Korean institutional investors shy away from stocks to beat bear market

  • PUBLISHED :April 01, 2019 - 16:18
  • UPDATED :April 01, 2019 - 16:18
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South Korea’s mutual aid associations in 2018 have shied away from stock investments and instead turned to portfolio diversification to take solid yearly gains in times of heightening global uncertainties, data showed on April 1. 


Yonhap


Last year, the Public Officials Benefit Association’s stock portfolio shrank to 15.2 percent, from 24.6 percent a year prior, according to its recent annual report.

In the meantime, the institutional investor with 12.20 trillion won ($10.76 billion) assets under management logged a 4 percent annual return. It was driven by 10.2 percent yields from alternative portfolio, which jumped to 58 percent in 2018 from 54.7 percent a year earlier.

As for the Police Mutual Aid Association, stock holdings at home and abroad accounted for 5.4 percent of their investment, down from 6.6 percent as of end-2017, according to its annual report finalized on March 26. In the meantime it saw some 4.5 percent yearly return with 3.07 trillion won AUM. It raised its bond asset proportion to 39.7 percent, from 37.3 percent as of 2017, while maintaining a fairly high proportion in alternative investments at 48.5 percent.

The Military Mutual Aid Association’s stock portfolio fell from 12.2 percent to 12 percent, while its entire portfolio gained 3.8 percent to 10.79 trillion won AUM. The Korean Teachers’ Credit Union, with 34.61 trillion won AUM, saw its stock portfolio decrease to 14.6 percent from 14.9 percent on-year, while taking a 4.1 percent return in 2018.

This comes in contrast to the losses of Korean pension funds’ heavy stock portfolios. The Teachers’ Pension and the National Pension Service, with 37 percent and 34.8 percent of stock portfolio logged a 2.45 percent and a 0.93 percent loss, respectively.

The news came amid a bearish stock market trend last year on the ongoing trade conflict between the United States and China. Korea’s top-tier Kospi fell 17.3 percent and second-tier Kosdaq dropped 15.4 percent last year. Also during the same period, US indexes S&P 500 and Dow Jones Industrial Average were down 6.2 percent and 5.6 percent, respectively.

By Son Ji-hyoung (consnow@heraldcorp.com)

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