Public Company Executives Say "Price Inflation Is Their Biggest Concern"

Samsung Securities Corporate Client Survey
Inflation Ranks No.1 in Management Risks
Followed by Fiscal Spending and Interest Rate Hikes

54% Expand Investment Assets like Stocks
43% Prefer US, Higher than Domestic Preference

[Asia Economy Reporter Ji-hwan Park] CEOs and CFOs of publicly listed companies in South Korea identified inflation as the biggest concern for corporate management this year. These executives cited stocks as the most promising investment vehicle for hedging against inflation.

Samsung Securities announced on the 4th that a survey conducted among CEOs and CFOs of companies with annual sales or market capitalization exceeding 300 billion KRW, through its ongoing ‘CEO·CFO Forum’ and the non-face-to-face ‘Untact Summit’ for listed companies, revealed that inflation (21.3%) was considered the top concern for corporate management this year. The survey was conducted from December 23 to 28 last year, with a total of 924 Samsung Securities corporate clients participating.

Respondents pointed to global price increases (21.3%) as a major risk factor in the business environment. More than half of the executives, 55.6%, expected inflation to persist for more than a year. Following inflation, changes in major countries’ policies such as fiscal spending (19.0%) and interest rate hikes (19.0%) were identified as key issues that executives are wary of.

In fact, 66.1% of executives answered that the biggest burden was the cost pressure caused by rising raw material prices. This was followed by increased financing costs due to rising loan interest rates (14.4%) as a management burden.

About 69.2% of executives expected the business environment in 2022 to be worse or similar to last year. Among respondents, 79.2% forecasted the domestic economic growth rate to be below 3%, and 60.1% expected inflation to exceed 3%. These projections are somewhat more pessimistic than the government’s forecast for this year’s domestic economic growth rate (3.1%) and inflation rate (2.2%).

As investment assets to respond to inflation and a gloomy economic outlook this year, investment-type assets were preferred the most. 53.6% of respondents said they would increase investment-type assets such as stocks and unlisted shares. This was followed by domestic and foreign bonds (19.7%) and structured products (10.4%). The response rates for cash and gold, a representative safe asset, were only 9.0% and 7.3%, respectively.

Regarding stock investment regions, 42.6% of respondents said they would increase their investment in U.S. stocks, higher than the 37.9% who favored domestic stocks. Compared to last year, when domestic stocks were the most preferred asset, this difference indirectly confirms a shift in executives’ financial asset investment patterns, Samsung Securities explained.

The global CEO that executives most wanted to emulate was Netflix CEO Reed Hastings. Tesla CEO Elon Musk was ranked second.

Jae-hoon Sa, Vice President and Head of Channel Sales Division at Samsung Securities, said, "Corporate executives foresee inflation becoming prolonged," adding, "In the ongoing COVID-19 pandemic situation, we plan to further upgrade the CEO·CFO Forum, an exclusive forum for corporate clients, in 2022 to provide trends and customized solutions that can offer insight to corporate executives."

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