[Market Insight] The Key to VIP Client Customized Asset Management Is "Portfolio Optimization"

Interview with Kim Hyung-ki, Senior Manager at Hyundai Motor Securities Gangnam Premier PB Center
One-on-One Consulting for VIP Clients... Providing Customized Solutions
Offering Tax Saving and Overseas Real Estate Investment Strategies for Ultra-High Net Worth Individuals

Hyungki Kim, Senior Manager at Hyundai Motor Securities, is giving an interview to Asia Economy at the Gangnam Premier PB Center on the 22nd.
[Photo by Hyundai Motor Securities]

"We accurately identify customer needs and provide one-on-one customized consulting. We offer optimized portfolio solutions encompassing various asset classes managed by our clients, including stocks, bonds, and real estate."

On the 22nd, Kim Hyung-gi, Senior Manager at Hyundai Motor Securities, whom we met at the Gangnam Premier PB Center in Gangnam-gu, described the center's greatest strength as its 'VIP customer-tailored asset management service.' Manager Kim is a veteran private banker (PB) who has accompanied ultra-high-net-worth clients for many years, successfully managing comprehensive assets.

He said, "To provide customized asset management, it is essential first to understand the characteristics of the client's assets. To this end, we thoroughly analyze the client's portfolio and provide specialized consulting and asset management guidance in areas such as real estate and taxation."

Providing Customized Asset Management... Maintaining High Returns on IRP and Wrap Products

The Gangnam Premier PB Center is Hyundai Motor Securities' first VIP-specialized branch. It opened in July last year and is now approaching its first anniversary. Manager Kim explained, "Until last year, which was the early stage, we established the system and laid the foundation for operations. While general branches manage a variety of clients, this Gangnam Premier PB Center focuses Hyundai Motor Securities' asset management capabilities solely on VIP clients."

He continued, "Currently, eight specialists, including the center head, identify clients' needs and provide one-on-one asset management services. Particularly, the tax consulting provided by the center head, who holds a tax accountant qualification, is a competitive advantage. Additionally, we regularly invite analysts to hold seminars on various products of interest to clients, such as U.S. real estate."

As a VIP-specialized branch, Hyundai Motor Securities Gangnam Premier PB Center also manages assets for current and former executives of Hyundai Motor Group affiliates. Manager Kim said, "Honestly, retired group executives have no obligation to entrust their asset management to our VIP center. However, many who have experienced other services return to us. We focus on stable management of individual retirement pensions (IRP) in line with the life cycle of our main clients, such as retired executives."

Manager Kim advised that bond products should be included in the portfolio for effective IRP management. He explained, "Although the recent decline in interest rates has been delayed more than expected, rates are unlikely to rise above current levels. Expectations for downward pressure on rates remain, allowing capital gains on long-duration government bonds. I recommend including corporate bonds with a coupon rate above 4% and maturities between two and three years. Holding these bonds to maturity is more advantageous in terms of returns than fixed deposits at savings banks with mid-3% rates." He added, "Including a portion of exchange-traded funds (ETFs) that regularly pay dividends helps generate cash flow, and even a small allocation to gold bullion and coin-related products should be considered."

Furthermore, Manager Kim stated, "We are also achieving good results with wrap account products that are managed through real-time rebalancing in response to rapidly changing market conditions. Although recent global volatility has negatively impacted returns, we are still outperforming the market. Reflecting on operations since last year, we maintained a certain cash ratio to respond timely to market corrections. This approach also helped us objectively and conservatively assess the market during rallies." He added, "A particularly effective strategy was using cash reserves accumulated during reasonable price adjustments to significantly invest in U.S. stock ETFs related to artificial intelligence (AI) semiconductors."

Hyungki Kim, Senior Manager at Hyundai Motor Securities, is giving an interview to Asia Economy at the Gangnam Premier PB Center on the 22nd.
[Photo by Hyundai Motor Securities]

Ongoing Volatile Market... Must Overcome with 'Earnings'

Amid risks such as delayed expectations for interest rate cuts and worsening Middle East tensions, Manager Kim emphasized that the condition for the market to rebound is strong corporate earnings. He said, "If it is proven by earnings that leading stocks remain robust, the market will recover. Conversely, if earnings disappoint, stock prices will experience pullbacks. The leading sector remains semiconductors, with Nvidia clearly the dominant stock. Although it recently dropped more than 10% amid volatility, this is likely a temporary correction in the long term."

He added that continuous monitoring of AI semiconductor-related stocks is necessary. "We need to thoroughly analyze the industry outlook until Nvidia's earnings announcement in May. If the results significantly exceed market expectations, there is a possibility of breaking previous highs again," he forecasted. However, he noted, "Legacy semiconductors will face limitations in growth. Leading stocks are re-rated based on growth potential and scalability, characteristics found not in legacy semiconductors but in high-bandwidth memory (HBM) related stocks." He further analyzed, "After AI hardware is fully established, there will be investment opportunities in the derived software ecosystem. For example, companies producing and servicing products like ChatGPT should be analyzed."

Regarding the secondary battery sector, Manager Kim expressed a cautious view. He said, "I do not deny the growth potential of secondary batteries, but a longer timeframe is needed before a major uptrend. The recent slowdown in electric vehicle demand recovery seems challenging, but since it is a growth industry, a certain portion should be included, though not a large share." He also mentioned, "If interest rate cuts become visible in the future, there may be opportunities in the bio sector. We must prepare for various scenarios."

Meanwhile, Manager Kim identified the financial investment income tax issue as an uncertainty to watch closely. He said, "When the financial investment income tax is implemented, returns will be affected depending on portfolio composition. However, the introduction of separate taxation on dividend income and the resulting easing of financial income tax rates are positive aspects." He added, "Value-up related matters are linked to political issues, making predictions difficult, so it is hard to approach with certainty on either side. We need to continuously monitor government policy developments and provide customized responses for clients."