Confusing Asset Market... Increasing Interest in Alternative Investments like Bonds and ELS

The bank run triggered by the collapse of Silicon Valley Bank (SVB) in the United States has increased confusion among investors. This is because both the 'negative factor' of expanding financial market instability and the 'positive factor' of easing tightening by the U.S. Federal Reserve (Fed) are acting simultaneously. In such an unstable market, wealthy investors are looking for opportunities in bonds, equity-linked securities (ELS), and other areas.

According to the Korea Financial Investment Association on the 24th, individual net purchases of bonds amounted to 7.5806 trillion won as of the 20th this year. This is about 1.6 times the total net purchases in 2021 (4.5675 trillion won) and exceeds one-third of last year's record-high individual net purchases (20.195 trillion won) despite the rapid rise in interest rates.

The ongoing 'bond investment boom' among wealthy investors is largely due to the uncertain market situation. With the fixed deposit interest rates and fixed-rate insurance product rates in the financial sector, which were popular last year, dropping to the 3% range, there is no confidence in the direction of asset markets such as stocks and real estate.

ELS are also attracting attention. Funds flowing into ELS have increased from 1.4227 trillion won in December last year to 1.6384 trillion won in January this year and 2.3413 trillion won in February. Kim Hak-su, PB team leader at Hana Bank Jamwon Branch, said, "Currently, the outlook for asset markets is not bright, but it is not a phase where investment sentiment has disappeared like last year," adding, "Many wealthy investors are more interested in alternative investments such as bonds and ELS rather than low-interest deposits."

Although gold and virtual assets have surged following the SVB incident, the prevailing view at this point is to be cautious about investing. While gold is a representative safe asset, its price volatility is actually very high, and transaction fees must also be considered. Regarding cryptocurrencies like Bitcoin, most opinions suggest maintaining a 'wait-and-see' stance for now.

Kim said, "In the past, there was a tendency to prefer safe assets like gold during crises, but recently that tendency has lessened," adding, "Bitcoin has risen nearly 40% from its low as recent negative factors have subsided and tightening policies suppressing the market have eased, but there are not many inquiries about new investments from wealthy investors."

In the real estate market, cautiousness still dominates over active investment, but some opinions suggest focusing on securing liquidity at this point. Jung Sung-jin, deputy head of Gangnam Star PB Center, said, "You could try applying for subscription or look into unsold houses if the purpose is actual residence," adding, "When purchasing in the future, considering loans, it is worth thinking about securing liquidity."

Additionally, if the purpose is to prepare funds for retirement, PBs recommended pension products or Individual Retirement Pensions (IRP) rather than investment products. They advised finding and subscribing to high-interest products from savings banks and others.

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