[Super Rich Targeted] Asset Owners with Over 3 Billion KRW Increase Proportion of 'Overseas Stocks and Bonds'

As High Interest Rates and Strong Dollar Trend Persist
Overseas Stock and Bond Investments Increase
In the Second Half... "Dollar Assets Promising"

Ultra-high-net-worth individuals with financial assets exceeding 3 billion KRW have been found to increase their investments in overseas stock markets and safe assets such as bonds this year. This investment portfolio is analyzed to have been formed based on expectations of stock price increases in major U.S. big tech companies like Nvidia, a leader in artificial intelligence (AI), as well as forecasts that despite high interest rate policies, U.S. economic indicators will remain strong and the strong dollar trend will continue.

On the 5th, NH Investment & Securities Big Data Center's survey on the portfolio composition of individuals with assets over 3 billion KRW showed that high-net-worth individuals increased their proportions of overseas stocks and overseas bonds. The share of overseas stocks in their portfolios rose from 5.80% in the first half of last year (January to June) to 7.29% one year later, an increase of 1.49 percentage points. The proportion of overseas bonds also increased by 1.25 percentage points, from 6.70% to 7.95%. In terms of valuation, overseas stocks increased from 581.2 billion KRW to 880.3 billion KRW, and bond holdings rose from 671.4 billion KRW to 959.8 billion KRW.

The reason for the buying spree in overseas bonds is interpreted as the market's prevailing expectation that interest rates will be lowered in the second half of the year, presenting an opportunity for bargain buying. Bonds provide nominal interest income (coupon rate) if held until maturity, and if bond prices rise (bond yields fall), investors can sell them for capital gains. Additionally, purchasing overseas bonds benefits from the strong dollar, allowing for potential foreign exchange gains.

Cha Jeong-geun, PB team leader at NH Investment & Securities Apgujeong WM Center, said, "Investment in the Nasdaq stock market appears to have surged due to expectations for major U.S. big tech companies," adding, "Despite the U.S. high interest rate policy, strong economic indicators and expectations for dollar assets seem to have had a greater impact on asset movement."

As in the previous year, domestic stocks were the most invested products by domestic asset holders. The proportion of domestic stocks in the asset portfolio was 38.20%, up 0.53 percentage points from the previous year. The next largest movement of funds was into bonds, including negotiable certificates of deposit (CDs) and commercial papers (CPs). However, the bond investment ratio decreased by 0.73 percentage points from 12.97% to 12.24%.

Team leader Cha explained, "Even aggressive investors among high-net-worth individuals rarely concentrate investments in specific stocks or products, and for conservative general investors, it is very difficult to form a diversified portfolio with small investment amounts. This suggests that investment tendencies and asset portfolios are greatly influenced by the scale of assets."

Funds moved into Managed Money Wallets (MMW) also increased, which is believed to be for short-term management purposes such as standby funds for the stock market, subscription deposits for initial public offerings (IPOs), and real estate standby funds.

On the other hand, the investment ratio in issued promissory notes, which offer fixed interest like bonds, decreased by 2.19 percentage points. Regarding this, Team leader Cha said, "It is estimated that assets in the issued promissory note market have shrunk as standby funds for stock market investments have been deployed into domestic and international financial markets."

Meanwhile, ultra-high-net-worth individuals view the dollar as the most promising investment product amid changes such as base rate cuts and the U.S. presidential election. Team leader Cha said, "Depending on domestic and international financial market conditions, recently there is a tendency to see dollar assets as the most promising," adding, "They are most interested in U.S. Treasury bonds (for stability) and investments related to big tech sectors, but the core for high-net-worth individuals is to diversify their assets."