Lee Doyoon, Yellow Umbrella CIO: "Korea's Inflation Shock Differs from the US with Reserve Currency"

[Asia Economy Reporter Park So-yeon] Lee Do-yoon, Chief Investment Officer (CIO) of the Yellow Umbrella Mutual Aid Asset Management Headquarters, warned that "the cumulative expansionary fiscal policies since the 2008 global financial crisis could shock the world economy, especially the Korean economy, which does not hold a key currency."

◇ 'Cumulative Expansionary Policies' Since 2008... Side Effects at a Serious Level

In an interview with Asia Economy, Lee Do-yoon expressed concern, saying, "An unprecedented amount of money has been flooded into the market, and side effects are appearing on all fronts."

He analyzed, "After the 2008 financial crisis, money was injected worldwide, but from 2015, a tightening phase was necessary, and interest rates were actually being raised. However, with the Trump administration, led by a real estate businessman, the interest rate hikes were halted, and sufficient money was not withdrawn."

He explained, "The economy should naturally go through cycles of injecting and withdrawing money, but this did not happen, and then COVID-19 broke out. Inflation occurred, and the restoration of money to its original state did not happen, causing distortions in 'wealth redistribution.'"

A representative example is rising prices: if money is just injected, prices rise, making it impossible for salaried workers to maintain their livelihoods. At first glance, price management seems well controlled, but a blind spot is that the most basic 'housing costs' are not included in the price index.

Lee warned, "No matter how much the U.S. prints and injects money, the dollar itself is a 'key currency' (the currency used as the basis for international settlements and financial transactions), so as long as the global economy grows, demand continues to increase, and the direct impact of inflation can be avoided. But in Korea, simply injecting money will make ordinary people's lives difficult." He emphasized that simply expanding national finances could deepen 'wealth concentration' and raise prices, making life harder for ordinary citizens and causing unintended consequences that require caution.

◇ Low-Interest Rate Policy to Continue Until Economic Activities Normalize After Vaccination

Regarding the economic outlook, he said, "Volatility will continue due to COVID-19 and vaccine effects, but the recovery trend will be maintained. The global fiscal and low-interest rate policies will continue until COVID-19 no longer hinders economic activities."

Regarding the domestic stock market, he said, "Caution is needed regarding the U.S. Federal Reserve's tapering and interest rate hikes, but the domestic stock market is still undervalued."

He explained, "The domestic stock market's fundamentals have improved, and a foundation for continuous level-up is being formed. This year, the KOSPI operating profit forecast is a favorable 170 trillion won, and the exchange rate is also stabilizing."

◇ Yellow Umbrella Asset Management at 16.5 Trillion Won... Targeting Growth to 20 Trillion Won Next Year and 30 Trillion Won by 2025

The current number of registered members of the Yellow Umbrella Mutual Aid exceeds 1.5 million. The current assets under management are about 16.5 trillion won and are expected to surpass 20 trillion won next year. The goal is to grow to 30 trillion won by 2025. Lee Do-yoon said, "Next year's implementation plan aims to reduce the proportion of bond assets, which are relatively high compared to other mutual aid associations, to below 50%. Alternative assets will be expanded to 33%, and stock assets will be maintained around 15%." Alternative investments will increase the proportion of blind funds considering risk management and rapid fund deployment.

Yellow Umbrella, responsible for the mutual aid business of the Korea Federation of Small and Medium Business (KBIZ), helps small businesses and small merchants stabilize their lives from threats such as business closure or old age and provides opportunities for business recovery. Immediately after the outbreak of COVID-19, it proactively lowered loan interest rates and implemented premium payment deferrals to support small business management stability. In December last year, it introduced interest-free loans for members affected by illness, injury, or disaster, and expanded local governments' Hope Encouragement Funds to 17 metropolitan local governments nationwide to strengthen the social safety net for small merchants. This year, psychological counseling services for small merchants suffering from business stress due to COVID-19 are being actively implemented, and non-face-to-face sales support is continuously promoted in cooperation with Home&Shopping.

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