25,438 Registered at the End of Last Year... Decline After Peaking in 2022
FSS: "Loss-Bearing Capacity and Expertise Remain Sound"
The number of registered individual professional investors in South Korea has increased more than sevenfold over the past five years. However, after peaking at the end of 2022, the figure has been on a downward trend. The average investment amount in financial investment products per person exceeded 600 million won.
According to the Financial Supervisory Service on June 22, the total number of registered individual professional investors as of the end of last year was 25,438. This is a remarkable 7.6-fold increase compared to 2,961 at the end of 2019, when related system improvements were implemented.
Under the Capital Markets Act, investors in financial investment products are classified as either general investors or professional investors, with separate regulatory regimes applied. Registration is only possible for those who meet requirements such as income, assets, expertise, and the ability to bear losses. The number of individual professional investors peaked at 30,247 at the end of 2022, then declined to 26,330 in 2023 and 25,438 in 2024.
As of the end of last year, the average amount invested in financial investment products per individual professional investor was 620 million won. This is 20.7 times larger than the average for general investors, which stood at 30 million won.
These professional investors were found to have distinctly different portfolios from general investors, diversifying across various financial investment products and focusing more on domestic stocks than overseas ones. As of the end of last year, stocks and exchange-traded funds (ETFs) accounted for the largest share at 69.9%. This was followed by bonds (14.5%) and funds (14.3%). In contrast, general investors were heavily concentrated in stocks and ETFs, which made up 88.8% of their investments.
In addition, the proportion of overseas stocks in the stock investments of individual professional investors was 13.3%, only a 4.6 percentage point increase compared to 8.7% at the end of 2019. During the same period, the share of overseas stock investments among general investors rose rapidly from 2.6% at the end of 2019 to 17.6% at the end of 2024.
Individual professional investors have also been expanding their bond investments, mainly focusing on domestic bonds. At the end of last year, bonds accounted for 14.5% of their total investment amount, up from a low of 3.6% in 2021. Of the 860 billion won invested in bonds, domestic bonds accounted for 590 billion won, representing 68.6% of the total.
An official from the Financial Supervisory Service stated, "Although interest in overseas stock investments has been rising recently, professional investors tend to consistently invest in domestic stocks rather than overseas stocks," adding, "When it comes to bonds, they also prefer relatively stable domestic bonds to hedge against risks such as currency fluctuations."
In terms of fund investments, professional investors were found to focus on private equity funds, which are a primary investment vehicle for high-net-worth individuals, rather than public funds. As of the end of last year, professional investors allocated 83.4% of their fund investments to private equity funds, while general investors mainly chose public funds (78.4%). In addition, investments in high-risk financial products such as CFDs (contracts for difference) amounted to about 1.6 trillion won, but this has generally contracted since peaking in 2021.
After reviewing the operation of the individual professional investor system, the Financial Supervisory Service assessed that the loss-bearing capacity and expertise of individual professional investors are generally at a sound level. The average annual income of individual professional investors was found to be 460 million won, and their assets averaged 1.86 billion won, indicating a loss-bearing capacity well above the entry requirements. In terms of investment portfolios, their investment expertise was also confirmed, as they diversified across a wider range of asset classes compared to general investors.
The Financial Supervisory Service stated, "We plan to actively support the individual professional investor system so that it can contribute to the vitalization of the capital market and the creation of a sound investment culture."
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