Investment Strategy for the Year of the Black Tiger (Im In Nyeon), Asked the Big Players

"Shaky stock market, opportunities will bloom."

"Be cautious with interest rate-sensitive real estate investments"

[Asia Economy Reporter Park Soyeon] The KOSPI started the new year of Im In-nyeon (壬寅年) at 2,998.32, up 20.67 points (0.69%). The KOSDAQ also began with a 0.53% rise, marking a fresh start for both markets. However, setting investment strategies amid harsh external factors such as inflationary pressures and the ongoing COVID-19 pandemic is not easy. Asia Economy sought new year investment strategies from major pension funds?‘big players’?that have managed large-scale funds steadily despite global investment uncertainties. What do their portfolios, unknown to retail investors, contain?

Lee Doyoon, Head of Asset Management Division at Naranwoosan

◆ Bubble deflates and selection begins = Lee Doyoon, Head of Asset Management at Noranwoosan (Korea Federation of SMEs Mutual Aid Division), said, "The major trend is shifting from expansionary policies to tightening, so there will be some shocks this year." He added, "As the bubble formed amid the rapidly changing situation after the COVID-19 pandemic dissipates, the process of ‘separating the wheat from the chaff’ will begin." Lee said, "This year, the domestic stock market is expected to perform slightly better than the global market. Not everything will be good, and public offerings that were favorable until early last year will now be differentiated." He advised focusing on variable-rate bonds rather than fixed-rate bonds during periods of interest rate hikes. He also emphasized caution in real estate investment, stating, "Real estate prices have risen to levels unsupported by actual demand. Speculative forces need to exit, but there is nowhere to absorb them. This cannot continue as is."

Ho-hyun Kim, Chief Fund Management Officer at the Korea Teachers' Credit Union

◆ Pay attention to the ‘Jeoncha (electric and electronic vehicles) group’ = Kim Hohyun, Chief Fund Manager at the Korea Teachers' Pension Fund, said, "I see momentum in the ‘Jeoncha (electric and electronic vehicles) group’ which had been sluggish over the past year. However, I expect some sell-offs in the second half when tax deferrals end." Kim added, "Electric vehicles will inevitably continue to increase, so batteries (secondary batteries) should also be noted. Biotech has recently undergone significant corrections, but it is a sector that must continue." He warned, "Real estate prices have risen not because of asset value increases but due to abundant money supply. I believe these factors will head downward, and the peak has been reached. Buying now means paying a price higher than the value."

Jongseok Han, Director of Financial Investment at the Police Mutual Aid Association

◆ Opportunities in raw materials such as secondary batteries and industrial metals = Han Jongseok, Financial Investment Director at the Police Mutual Aid Association, said, "The global stock market, led by the U.S., fully reflected corporate earnings growth last year, so it is difficult to expect a similarly significant index rise this year. However, the domestic market, which has a large portion of market capitalization in semiconductors and automobiles, has undergone preliminary adjustments and is expected to enter a structural growth phase based on the competitiveness of key industries leading the next generation, such as digital platforms, artificial intelligence, and green energy." Han said, "Last year, the raw materials sector achieved decent returns but did not attract significant funds, so I am focusing on industrial metals used in secondary batteries."

Sanghee Lee, Director of Financial Investment Division at the Military Mutual Aid Association

◆ Timing for U.S. aging infrastructure overhaul arrives, eyeing investment opportunities = Lee Sanghee, Financial Investment Director at the Military Mutual Aid Association, said, "Advanced countries like the U.S. are significantly increasing infrastructure investments such as communication towers. The timing to refurbish nearly 60-year-old aging infrastructure has arrived, and we are looking for investment opportunities in this area." Lee added, "In real estate, there is expected demand for central office buildings, logistics centers, and data centers. However, rising interest rates reduce expected returns." He also said, "There is no need to be pessimistic about the Korean stock market this year. Semiconductors and the metaverse are expected to lead the market."

Seowonju Public Officials Pension Fund Management Director

◆ ‘Ping-pong’ brings opportunities back to the domestic stock market = Seo Wonju, Head of Fund Management at the Government Employees Pension Service, said, "The domestic stock market rose about 30% the year before last, while the U.S. rose about 15%. Since the U.S. rose nearly 30% last year and the domestic market was around 5%, I believe there is room for the domestic market to rise again this year." Seo said, "In the second half of last year, sectors like technology hardware, metaverse, non-fungible tokens (NFT), augmented reality (AR), and virtual reality (VR) showed stocks expected to grow this year. Also, since the economy moves in cycles, there is some delay, but the recovery trend cannot be stopped. We need to watch economically related stocks." Seo added, "Real estate is sensitive to liquidity and interest rates, so the global environment is not favorable."