KB Asset Management "Next Year's Stock Market Leading Theme is Metaverse"

Next Year's Stock Market Outlook Relay Interview
Shim Hyoseop, Head of Equity Management at KB Asset Management
Focus on Metaverse Next Year. ESG Trend Continues

Editor's NoteAs the stock market remains trapped in a box range, the concerns of Donghak Ants have deepened. The KOSPI, which rose to 3300 earlier this year, plunged to 2900, triggering a warning light that is causing headaches. This is the result of various adverse factors hitting the stock market, including the disappearance of the COVID-19 base effect, interest rate hikes, and a sharp rise in raw material prices. Next year will not be easy either. Asia Economy met with heads of equity management departments who oversee fund managers at domestic asset management companies to explore ways to overcome these concerns.

Shim Hyo-seop, Head of Equity Management Division, KB Asset Management

[Asia Economy Reporter Junho Hwang] "While regulations on platforms have tightened worldwide, the metaverse is now taking off."

On the 5th, Shim Hyoseop, Chief Investment Officer (CIO) of KB Asset Management’s Equity Management Department, named ‘Metaverse’ as the leading theme for next year. The head of the equity management department oversees stock operations including funds. KB Asset Management’s public fund management scale among its net assets is 24.4991 trillion KRW, making it the third largest in Korea.

Shim focused on the fact that platforms, once symbols of growth stocks, are increasingly becoming targets of regulation. He predicted, "Globally, regulations on platforms will intensify, as seen in agreements like the G20 digital tax." As he mentioned, voices are growing in Korea to address issues such as infringement on local businesses, overexpansion, and abuse of power related to the growth of platform companies.

On the other hand, the metaverse can be seen as a next-generation platform that has so far avoided such controversies. It is also at the early stage of growth. Shim said, "The metaverse is gaining attention as a platform that evolves existing internet platforms to the next level, sparking a global investment boom." For example, Facebook changed its name to ‘Meta’ and plans to invest 10 billion USD (approximately 11.68 trillion KRW) in metaverse development by next year, while domestic companies are also stepping up to secure early positions in the metaverse market. However, he noted, "The market capitalization of metaverse-related companies is small, and their technology and products have not yet been verified, so stock prices have gotten ahead of themselves," adding, "There will be a need to separate the wheat from the chaff going forward."

Shim also expected the ESG (Environmental, Social, Governance) trend to continue next year alongside the metaverse. With growing global interest in climate change response and eco-friendliness, funds are expected to continue flowing into ESG. He analyzed, "Specifically, since large-cap stocks with the financial capacity to manage ESG tend to have higher ESG ratings, attention to large-cap stocks is necessary," and added, "There is great expectation for ESG funds that include large-cap stocks in sectors like semiconductors and automobiles, where business conditions are expected to improve next year."

In the case of KB Asset Management, about 60% of the ESG rating is reflected from external institutions such as Daishin Economic Research Institute, and about 40% is based on internally developed ESG ratings, managing funds like the KB ESG Growth Leaders Fund, which only includes stocks above a certain rating.

Regarding the overall stock market next year, Shim predicted it would be a ‘Boxpi’ (KOSPI trapped in a box range). "Given the possibility of interest rate hikes, the upper limit of the KOSPI will be constrained," he forecasted. He suggested an expected KOSPI fluctuation range of 2800 to 3300.

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