How Do You View Vice Ministers Investing in Overseas Stocks? [Reading Science]

New York Stock Exchange. Stock photo. Not directly related to the article. [Image source=Yonhap News]

[Asia Economy Reporter Kim Bong-su] It has been revealed that Yong Hong-taek, recently appointed as the 1st Vice Minister of the Ministry of Science and ICT, invested in overseas stocks by borrowing over 100 million KRW. While there is no illegal or illicit activity as a high-ranking public official, questions have been raised about whether this is an appropriate conduct.

In this regard, President Moon Jae-in made eight vice minister-level appointments on the 26th. Vice Minister Yong was promoted from Director of the Research and Development Policy Office to 1st Vice Minister overseeing science and technology policy. This was a 'dramatic' personnel move as he surpassed the Planning and Coordination Office Chief, who is ranked first within the ministry. The Blue House explained, "He is an expert who has led innovation in science and technology policy and research and development," and added, "Based on his planning ability, work execution skills, and smooth communication capabilities, he is expected to greatly contribute to securing the nation's future growth engines through creating a creative and challenging research environment, carbon-neutral research and development, and space technology development." Vice Minister Yong is a career bureaucrat who entered politics through the technical civil service exam after graduating from Hanyang University with a degree in electrical engineering and has worked continuously in the field of science and technology policy.

However, since the government disclosed the assets of high-ranking public officials the day before, I examined Vice Minister Yong's asset details and found something interesting. The total amount was only 960.78 million KRW, which is significantly less compared to the average of around 3 billion KRW among high-ranking officials in the Ministry of Science and ICT and its affiliated agencies. This suggests that Vice Minister Yong has generally managed himself well as a bureaucrat. Regarding recent controversies, he neither owned land in the 3rd New Town development nor received a 'special supply' apartment in Sejong City.

The issue is that he invested in overseas stocks by borrowing money amid the overseas stock investment boom that started last year. Vice Minister Yong newly purchased overseas stocks worth a total of 104.628 million KRW last year, spanning as many as 19 different items. Rather than buying individual listed company stocks, he invested small amounts in 19 ETFs (Exchange-Traded Funds), which yield returns based on the movements of specific stock indices.

Moreover, his spouse and eldest son also newly purchased overseas stocks worth 51.476 million KRW and 26.477 million KRW, respectively. His spouse bought 10 items, including Johnson & Johnson and Ares Capital, with the rest being ETFs. His eldest son invested small amounts in five ETFs as well as stocks such as Boeing, Carnival, and Apple.

Where did the funds for Vice Minister Yong's stock investments come from? He did not break his deposits. The total deposits of his family slightly increased from 203.923 million KRW the previous year to 204.06 million KRW. Other assets such as real estate remained mostly unchanged from the previous year. However, his debts increased significantly, rising from 52.8 million KRW to 186.271 million KRW, an increase of about 133 million KRW. This was due to new loans taken out in his name from NongHyup Bank (100 million KRW), the Government Employees Pension Service (12.499 million KRW), and Samsung Fire & Marine Insurance (an additional 47.8 million KRW).

Considering these facts, it appears that Vice Minister Yong concentrated his investments in overseas stocks last year by borrowing from banks amid the overseas stock investment boom.

Born in 1963 and nearing retirement, no one would criticize Vice Minister Yong for engaging in legal financial management for his retirement security. Given the rigorous personnel screening process at the Blue House, it is unlikely that there were any illegal or problematic issues. It is also highly probable that he did not anticipate his promotion to vice minister. However, should a high-ranking public official responsible for important parts of national governance reconsider investing large sums in stocks, especially overseas stocks, by borrowing money from banks?

As you know, investing in stocks with borrowed money can truly consume one's soul. Even starting with surplus assets, it is natural to click stock apps all day long, let alone investing large borrowed sums in overseas stocks. Despite the ultra-low interest rate environment due to the COVID-19 pandemic and the favorable trends in both domestic and overseas stock markets, the probability of 'ruin' from investing with borrowed money remains high.

Furthermore, ETFs are sensitive to the trends of overseas stock markets, requiring attention such as entering overseas sites and searching for news from early morning. Because of this, many office workers nowadays are dozing off at their desks during the day.

Neither the public nor President Moon Jae-in, who appointed him, would expect such behavior from Vice Minister Yong, a career technology bureaucrat, would they?

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