Even the Wealthy Ask, "Is It Okay to Enter Now?"... Flocking In With Cash Bundles [Wealth Investment Strategies] ⑨

Interview with Seong Sidon, Head of Sales at LS Securities
Shift from Deposits to "Semiconductors and AI"
Domestic Equities Attract Attention amid Exchange Rate and Tax Barriers

The adage "Cash is Trash" has been circulating among the wealthy. To defend against declining asset values, there is a growing trend of reducing cash holdings and reallocating portfolios toward riskier assets.

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Sung Sidon, Head of Sales at LS Securities Yeouido Branch, said in an interview with The Asia Business Daily on April 30 at the LS Securities Yeouido Branch in Yeouido, Seoul, "Clients who previously preferred deposits and bonds have significantly reduced their cash allocations and are now increasing their stock holdings. There is a strong perception that, due to inflation, deposit yields cannot keep up with the rate of price increases, and that simply leaving cash in the bank results in a real loss." He continued, "In the past, the question clients asked most was 'What should I buy?' but these days, it's 'Is it okay to enter the market now?' In other words, everyone shares the view that they should be buying stocks."

Seong Sidon, Head of Sales at LS Securities Yeouido Branch, is being interviewed by The Asia Business Daily on May 30th at LS Securities Yeouido Branch in Seoul. LS Securities

The top pick among high-net-worth investors is undoubtedly semiconductors. Sung explained, "No matter how many times you ask, the answer is semiconductors. It is a sector less affected by external factors such as geopolitical risks. Next in line are artificial intelligence (AI) and robotics stocks." As promising investment assets, he recommended ETFs focused on AI and semiconductors, nuclear energy, and shipbuilding.

Unlike in the past, interest in domestic stocks has increased. Sung said, "Previously, there was more interest in overseas stocks and a prevailing sense that domestic returns were limited. However, the atmosphere has shifted to greater confidence in the domestic market after a period of bullishness in the KOSPI index." He added, "If you think about U.S. stocks, the exchange rate is now close to 1,500 won per dollar, so you have to buy stocks at a higher price than when the rate was lower in the past, and you have to pay a 22% capital gains tax on any profits exceeding 2.5 million won. Under the same conditions, if you want to match domestic investment returns, you need to earn significantly more from overseas stocks."

Liquidity is also a crucial factor. Sung said, "Overseas unlisted stocks have poor accessibility and are essentially in a league of their own. Structured products can't be freely liquidated when risks arise, making it hard to avoid losses." He went on, "Stocks are advantageous in that you can immediately convert them to cash if you sense any risk, and there's a higher preference for U.S. big tech companies."

Perceptions around virtual assets have changed, yet opinions remain divided. Sung noted, "Although there was a lot of controversy in the past, virtual assets have now become an indispensable part of portfolios. Many clients invest in leading coins like Bitcoin, Ethereum, and Ripple, but their portfolio allocations remain relatively small."

Everyone is sensitive to changes in government tax policy. Sung explained, "There was a sense of relief when the financial investment income tax was scrapped. Had it not been, the stock market would have faced much more noise even in a bull market. Wealthy clients have always shown keen interest in inheritance and gift taxes, and are hoping for quick relaxation of these taxes." He continued, "Nowadays, business owners do not immediately transfer their companies to their children due to concerns like tax audits. Instead, they establish separate companies for their children when they are young and gradually prepare for succession by growing the business and having them hold shares."

Seong Sidon, Head of Sales at LS Securities Yeouido Branch, is giving an interview with The Asia Business Daily at LS Securities Yeouido Branch in Yeouido, Seoul, on the 30th of last month. LS Securities

LS Securities' specialized strategy lies in "corporate visits." Sung said, "If we determine a stock is promising, we go on site to visit the company. Of course, there are many companies that won't meet or are hard to schedule with. In those cases, we still try to attend investor presentations or general meetings of shareholders."

Sung advised, "Invest, don't speculate." He said, "The line between speculation and investment is very thin, but if you look a year ahead, the results are completely different. Speculation is investing money you can't afford to lose, and typically such investors avoid long-term investments." He added, "You should invest in companies with solid earnings, and newly listed stocks targeted for quick gains are risky. If you haven't properly researched individual stocks, it's better to buy ETFs."

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