[Market Chaos] Head of Stock Management "Conservative Response" Head of ETF Management "Alternative Investments Instead of Themes"

Asset Management Firm "Stock Market Volatility Will Not Last Long"
ETF Operations Headquarters "With Safer Alternative Investments"

On the 14th, as the KOSPI fell more than 1% in the early session, breaking below the 2500 mark, dealers were working in the Hana Bank dealing room in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporters Junho Hwang, Yoonju Hwang] On the 14th, as the KOSPI slipped to the 2400 level, asset management companies also began devising countermeasures. Heads of equity management departments stated that although market volatility is unlikely to persist for a long time, they plan to respond conservatively. However, since recent sharp declines caused by inflation and other factors are already recognized by the market, they did not see a high possibility of further sharp drops. Heads of Exchange-Traded Fund (ETF) management departments recommended alternative investments with relatively higher stability instead of highly volatile thematic ETFs.

Asset Management Firms Hold Strategy Meetings... "Conservative Approach"

On the morning of the same day, most domestic asset management firms held strategy meetings in response to market fluctuations and began preparing countermeasures. After the meeting, Yongdeok Koo, Head of Equity and Research at Mirae Asset Global Investments, stated, "Inflation is being reinforced by high oil prices, so we intend to take a somewhat conservative approach until signals of easing factors appear." While maintaining a generally conservative market outlook, he forecasted that it would be effective to focus on companies whose asset value and valuation downside are maintained alongside earnings growth.

Some firms presented management strategies based on the expectation that the current market shock will not last long. Sangjin Jeong, Head of Equity Management at Korea Investment Management, said, "Although fears of stagflation are growing, the risks related to the current situation are somewhat reflected in the market," adding, "We do not expect a sharp market decline going forward."

[Image source=Yonhap News]

Investor outflows have not been significant yet. As of the 10th, when concerns about the U.S. Consumer Price Index (CPI) increased, the net assets of domestic funds stood at about 308 trillion won, down approximately 5 trillion won from 313 trillion won at the beginning of the year. Equity funds (including mixed funds) were around 85 trillion won, down 10 trillion won from 95 trillion won at the start of the year. As of the 10th, the net assets of Exchange-Traded Funds (ETFs) were about 72 trillion won, approximately 1 trillion won less than at the beginning of the year.

ETF Management Heads: "Alternative Investments Over Thematic ETFs... Defense Through Portfolio Diversification"

Heads of ETF management departments advised that although funds have been concentrated in thematic ETFs, it is necessary to turn attention to alternative investments. Jeonghyun Kim, Head of the ETF Management Center at Shinhan Asset Management, diagnosed, "Thematic ETFs, which currently attract the most funds, have been hit hardest by rising prices," adding, "A defensive strategy allocating funds to REITs, bonds, carbon emission rights, and others is necessary." He further stated, "Rather than selling currently held ETFs, diversifying the portfolio will be the most proactive defense."

Taehyuk Lim, Head of ETF Management at Samsung Asset Management, suggested, "In the long term, market index ETFs are expected to be more advantageous than thematic ones," and added, "We believe it is beneficial to either hold cash or invest in risk-free benchmark rates such as KOFR."

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