KIC Celebrates 15th Anniversary...Experts Call for Expanded Collaboration and Joint Investment Between Sovereign Wealth Funds and Financial Firms

[Asia Economy Reporter Park Jihwan] As the Korea Investment Corporation (KIC), the country's only sovereign wealth fund, celebrates its 15th anniversary this year, there are calls to share the investment experience and networks accumulated through overseas investments with other financial institutions and to expand joint investments.

Park Young-sik, President of the Korea Capital Market Institute, emphasized that "KIC should play a more active role in supporting the internationalization of the domestic financial industry" during his presentation titled "Development Plans for KIC Amid Changes in the External Investment Environment and Sovereign Wealth Fund Trends" at the KIC 15th Anniversary Seminar held on the 1st at the Westin Chosun Hotel in Sogong-dong, Seoul.

He stated, "The overseas investment management capabilities of domestic financial institutions are evaluated to be weak compared to foreign institutions," adding, "KIC needs to step up and contribute to the expansion of overseas operations of domestic financial institutions."

In particular, he proposed that to contribute to the expansion of overseas operations of domestic financial institutions, goals related to co-growth with domestic financial companies should be established.

He also argued for the establishment of a quota program that partially outsources to domestic financial institutions. He said, "Through setting specific criteria such as the scale of entrusted funds, the number of selected institutions, target regions for management, and bonus point items, the capabilities of domestic companies related to overseas investment should be enhanced," emphasizing, "Participation of domestic financial investment companies should be expanded in major investment consultative bodies such as the Overseas Investment Council, which was launched in 2014 mainly by domestic pension funds and mutual aid associations."

President Park expects the global external investment environment to remain challenging for the time being. He diagnosed that the downsizing trend is still dominant as the impact of COVID-19 continues as a global pandemic.

Furthermore, there is a forecast that the long-term deviation period of global economic growth due to the spread of COVID-19 will be prolonged. President Park stated, "Although the spread of COVID-19 is passing the worst phase, it seems difficult to maintain a transition to the pre-crisis long-term trend of real GDP."

He also predicted, "By the end of this year, government debt levels in various countries will surge," adding, "Government debt in advanced countries such as the United States and Europe, which experienced severe economic shutdowns, is also expected to increase sharply." However, he noted, "Although interest rates are still low and interest payments are not a significant burden on government finances, there could come a time when the whole world feels the burden of interest rates."

During the subsequent panel discussion, investment industry experts offered various suggestions regarding KIC's role.

Park Cheon-ung, CEO of Eastspring Asset Management, suggested the need for a new definition of KIC's organizational identity. He pointed out, "KIC's organizational nature is exactly in the middle between public and private, and between experts and the general public," adding, "It is time to ask whether the government is making efforts to make KIC the best organization."

Calls for expanding collaboration cases followed. Park Hak-joo, Head of Operations at NongHyup Central Association, said, "Deal sourcing is extremely important to increase sovereign wealth," pointing out, "Deals related to promising overseas investment destinations rarely come back to domestic institutions."

He added, "Due to lack of information on target investment projects, most financial companies do not even get opportunities," suggesting, "There should be more cases where KIC shares its network and deal sourcing capabilities with financial companies."

Meanwhile, at the seminar, Howard Marks, Chairman of Oaktree Capital, the world's largest distressed debt specialist, gave a live online special lecture titled "Investment in the Pandemic Era." He diagnosed the dilemmas facing today's global economy and forecasted the pros and cons of the investment environment and proper investment strategies in the pandemic era. In the following session, Damian Prelli, CEO of Queensland Investment Corporation (QIC), Australia's sovereign wealth fund, introduced the importance of expanding entrusted institutions as a sovereign wealth fund.

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