[Urgent Diagnosis] 5 Institution CIOs "Trump Variable Already Reflected, Investment Activation with Uncertainty Resolution"

Urgent Investment Market Diagnosis in the 'Trump Era' by 5 Leading Domestic CIOs
Virtual Asset Industry Benefits...Eco-friendly and China-related Sectors Face 'Crisis'
Interest Rates and Exchange Rates Key Variables for Post-Election Investment Decisions

"When you meet global asset managers, you naturally ask them. I've never heard anyone say Harris would win. For a whole year, it was consistently said that Trump would be elected."

On the 7th, when asked about 'Trump's presidential election and the future outlook of the investment industry,' a chief investment officer (CIO) of a domestic mutual aid association said, "The market was already moving on the assumption that Trump would win," adding, "There is not much fundamental change compared to the current Democratic government, and investment is expected to be generally more active."

Our publication conducted an urgent interview with CIOs of major domestic pension funds and mutual aid associations regarding the potential impact of Trump's election on the investment industry. Five CIOs responded: Park Mansu, CIO of the Korea Teachers' Pension; Baek Juhyun, CIO of the Government Employees Pension Service; Seo Woncheol, CIO of the Yellow Umbrella Fund; Lee Sangmin, CIO of the Construction Workers' Mutual Aid Association; and Heo Jang, CIO of the Korea Local Government Officials Mutual Aid Association. These 'big players' manage assets under management (AUM) ranging from several trillion to tens of trillions of won. The interviews were conducted on condition of anonymity.

Environmental Industry 'Negative Factor' Virtual Asset Industry 'Positive Factor'

These experts commonly stated, "Trump's election could act as either a negative or positive factor for certain sectors." CIO A said, "Sectors directly impacted by Trump's policies, summarized as tariff barriers and anti-environmentalism, require caution in investment," adding, "Industries supported by the Democrats, such as the environmental and secondary battery sectors, and Chinese companies, which are the primary targets of tariff barriers, are expected to suffer immediate damage." This is because President Trump is likely to attempt to nullify the Inflation Reduction Act (IRA) and roll back environmental policies such as the promotion of electric vehicles, which must be taken into account. Industries with high export dependence were also identified as sectors requiring investment caution.

On the other hand, many responded that the virtual asset industry is expected to directly benefit. CIO B said, "The virtual asset sector and related platforms such as exchanges will generally improve," adding, "Venture capital (VC) investing in virtual asset-related startups has struggled with exits due to a lack of funding in recent years, but prospects look promising going forward." However, it is expected to be difficult for domestic institutions such as pension funds and mutual aid associations to invest directly in Bitcoin (BTC) unless financial authorities approve spot Bitcoin exchange-traded funds (ETFs).

Uncertainty Resolution → Expectation of Investment Activation

There was also much expectation that the investment market would become more active as the election event concluded. CIO C said, "Even though Trump was a strong candidate, there was a considerable amount of market capital waiting and observing the election," adding, "With the biggest risk in investment?uncertainty?resolved, I expect many deals to become active going forward." For example, as of the end of last year, the global private equity fund (PEF) industry's dry powder (unfunded commitments) reached a record high of $3.9 trillion (approximately 5,450 trillion won). CIO C said, "Investment institutions that were cautious due to political considerations will now aggressively exit, whether by cutting losses or realizing profits," adding, "This is likely to lead to a chain reaction of new investments and bring a favorable breeze to the market."

The CIOs emphasized that "investment is about response, not prediction," citing interest rates and exchange rates as variables that will influence future investments. CIO D said, "The most important factors in institutional investment are ultimately interest rates and exchange rates," adding, "If the consensus of domestic and international institutions?that interest rates will not return to the previous 'zero' era?holds true, preparations for a sustained high-interest-rate environment should be sufficient." CIO E said, "Because interest rates and exchange rates may show a reversal phenomenon different from our expectations, it may soon be time to actively manage 'currency risk' depending on short-term trends and volatility."