"Regular Investment Funds Are Good..." Flood of Investor Complaints to Bank PB Centers Amid Stock Price Plunge

US-China Trade Conflict Easing Phase
Early This Year, Market Optimistic Outlook
PBs Actively Recommend Regular Savings Funds
Stock Prices Revert to 10 Years Ago Due to COVID-19
Surge in Redemption Inquiries Over Principal Loss

[Asia Economy Reporter Kangwook Cho] "Isn't this the same financial crisis as before? I'm worried that we might need to redeem now."

Due to the 'pandemic' impact of the novel coronavirus infection (COVID-19), not only the domestic but also the global stock markets have been shaken, causing a flood of complaints and inquiries from investors at retail bank PB centers recently. This is because bank PBs actively recommended installment savings funds as financial products, anticipating a rising market this year. Customers who invested heavily in installment savings funds based solely on PBs' advice have been gripped by extreme fear as stock indices have reverted to levels seen 10 years ago.

According to the financial sector on the 19th, as the KOSPI index fell below the 1600 mark for the first time in about 10 years, investors are agonizing over whether to terminate their fund contracts and accept large principal losses or to hold on. They have been calling the retail bank PB centers, which sell these fund products, to inquire about redemption or to express anger over the loss of their investment principal.

A representative from Bank A's Gangnam PB Center said, "Recently, not only the domestic but also the global stock markets have plummeted, and we have been receiving many worried inquiries asking what this situation is and what will happen to the world economy," adding, "Although these are public offering funds with no room for mis-selling, inquiries have increased significantly, especially due to the sharp decline in U.S. stocks."

There were particularly many concerns about redemption of Equity-Linked Securities (ELS) products. A PB center representative from Bank B in Gangseo-gu, Seoul, explained, "Recently, inquiries related to ELS due to the stock market plunge have surged," and added, "While there are many concerns about whether ELS will pay out returns, it seems that many customers are seeking comfort and information."

Also, a VIP counter representative at a branch of Bank C in Mapo-gu, Seoul, said, "Due to the recent plunge in domestic and major global stock markets, we have been receiving many inquiries both at the counter and by phone about whether the ELS products customers subscribed to are safe," and lamented, "We are focusing on reassuring customers by sending long text messages (LMS) explaining the current market situation to each individual."

Until early this year, retail banks optimistically forecasted the global market situation and recommended installment savings funds as promising financial products. This was because the trade conflict between the U.S. and China was entering a resolution phase, raising expectations for global economic growth. According to the Korea Financial Investment Association, the sales volume of overseas funds by domestic banks decreased by nearly 500 billion KRW from 17.5083 trillion KRW at the end of November last year to 17.0207 trillion KRW at the end of December, but increased again to 17.2089 trillion KRW at the end of January this year. Investment increased with rising expectations for a bullish market, but the stock market crash caused by the COVID-19 situation has left many customers dismayed.

In particular, elderly investors with a strong preference for safe assets have often considered redemption due to anxiety about the market situation. Recently, even high-net-worth individuals have been more cautious, preferring to carefully observe the situation rather than rushing into low-price purchases, which is a change from previous years.

A PB center head at a retail bank said, "Until February, we received many inquiries from VIP customers about the timing of low-price purchases," and forecasted, "However, as the COVID-19 situation has escalated into a global pandemic, making the stock market situation unpredictable, these customers have also adopted a more watchful stance."

This content was produced with the assistance of AI translation services.