Korean asset managers bank on virus recovery

Luggages are on display in Lotte Department Store in central Seoul. (Yonhap)

South Korea’s asset managers are counting on the global recovery from the coronavirus pandemic as vaccination gathers momentum.

This, in turn, is adding fuel to Korean managers’ efforts to revisit industrial sectors that were hardest-hit by the virus impact.

Shinhan Asset Management, an asset management arm of Korea’s banking group Shinhan, said Monday it plans to launch a second batch of its hybrid fund next week, in order to target companies reeling from the pandemic amid signs that the impact of the coronavirus is abating.

The asset allocation fund is aimed at switching the investment target from domestic stocks to bonds once the fund manager achieves its return-on-investment target.

Its stock portfolio will comprise shares in domestic companies in “cyclical industries” -- ones that expects to rise in value in line with the recovery, such as discretionary consumer goods or services and industries involving face-to-face interaction with consumers.

Shinhan Asset’s first round of the fund launched in May, has gained 8 percent in two months to adjust its stock portfolio to bonds, as the fund had attained the goal of 7 percent return since its inception.

The strategy got a boost recently, as Korea reached its 13 million vaccine rollout goal on June 15, ahead of schedule.

“If the world raises its COVID-19 vaccination rate, hopes for recovery in activities and consumptions based on the face-to-face interaction will grow higher, so we focused on the beneficiaries from the trend,” said Jung Sung-han, director of Alpha Investment Center who leads active stock management at Shinhan Asset.

On the other hand, Mirae Asset Global Investments said Monday its exchange-traded fund that focuses on the travel industry has seen its net asset value jump eightfold in less than six months.

The stock ETF has exposure to 16 listed stocks in Korea in the field of tourism, leisure businesses and casino facilities operation, including Hanjin KAL, HanaTour Service, Paradise and Hotel Shilla. The ETF’s price rose over 30 percent from January until Friday.

The ETF’s size jumped from 12 billion won ($10.5 million) as of end-2020 to over 100 billion won on June 15, supported by the rebound in the prices of the portfolio’s stocks and an additional 34 billion won put in by retail investors year to date, according to the asset manager.

“As the United States is enjoying a pent-up demand for travel, so will Korea as vaccine rollout continues to go forward,” said Kwon Oh-sung, head of ETF Marketing Division at Mirae Asset.

By Son Ji-hyoung (consnow@heraldcorp.com)

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