Injection of 10 Trillion Won Supplementary Fund This Month, Operated by 'Capital Call' Method

23 Financial Investment Institutions Agree to Establish 'Dahamtogether Korea Fund'... First Phase Expected to Be Around 3 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] The Securities Market Stabilization Fund (SMSF), established by the government and private financial companies to stabilize the securities market, will be actively deployed in the market starting early this month.

On the 31st of last month, the Financial Services Commission, Korea Securities Finance, and 23 other financial investment institutions officially agreed to establish the 10 trillion won-scale "Together Korea Fund (SMSF)." The investment scale includes 2 trillion won from the Korea Development Bank, 1 trillion won each from the four major financial holding companies (KB, Woori, Hana, Shinhan), and 700 billion won from NongHyup Financial Group. In the financial investment industry, Mirae Asset Daewoo (540 billion won), Korea Investment & Securities (400 billion won), Samsung Securities (325 billion won), and Meritz Comprehensive Financial Securities (235 billion won) contributed a total of 1.5 trillion won. Additionally, the life insurance industry raised 850 billion won, regional banks 500 billion won, and the non-life insurance industry 450 billion won.

The Financial Services Commission explained that the SMSF is scheduled to begin operations early this month after completing procedures such as establishing an Investment Management Committee composed of participating financial institutions and private experts. Once the Investment Management Committee is formed, it will decide on the selection of asset management companies responsible for fund operation and the investment direction. Earlier, on the 25th of last month, four securities-related institutions including the Korea Exchange and the Korea Securities Depository signed a memorandum of understanding to prepare for the execution of the 760 billion won-scale SMSF.

Fund investment will not be made all at once but will be executed through a "Capital Call" method, where funds are gathered into a parent fund and then disbursed through subsidiary funds by each investor. The first capital call is expected to be around 3 trillion won, considering the liquidity of financial companies, and future fund disbursements will be decided by the Investment Management Committee based on market conditions.

A Financial Services Commission official stated, "The Investment Management Committee will decide on the implementation, period, and payment method of the capital call according to market conditions," adding, "The amount of capital call reserve funds to be held in the future will also be decided through consultation between the asset management company and the Investment Management Committee."

The operation of the parent fund will be handled by Korea Investment Trust Management, the weekly manager of the private pension investment pool. The selection of subsidiary funds and allocation of investment funds will be decided by the weekly manager and related institutions according to the guidelines of the Investment Management Committee. Furthermore, the investment targets are limited to index products representing the entire securities market, such as the KOSPI 200, rather than individual stocks. This is intended to promote overall stability in the stock market.