Korean Wave in Financial Products
South Korean asset management companies have exported their overseas fund products to Japan, creating a Korean Wave or “Hallyu” in the asset management industry. They are also hiring more Japan-related experts and releasing a series of Japan-related products in the domestic market as they believe that the Japanese economy has clearly begun to recover.
According to investment banking (IB) industry sources on July 19, Korea Investment Management Co. will start to sell its Vietnam Growth Fund in Japan at the end of this month. It has become the first company that exported its home-made overseas public offering fund products to Japan. The seller of the products is Nomura Securities Co., which ranks top in the industry in Japan. This also shows that how much competitive KIM Vietnam Growth Fund is.
The fact that Japan’s No. 1 brokerage has decided to sell the overseas fund product created by South Korean asset management firm is considered a symbolic event that Japan acknowledges the competitiveness of the domestic asset management firm’s product. The KIM Vietnam Growth Securities Master Investment Trust attracted more than 301.2 billion won (US$264.67 million) for six months in the first half of this year, which is a period of adjustment in the Vietnamese market. The fund was so popular in South Korea with the highest amount of contracts. To this end, Korea Investment Management had been prepared for the project for over a year and a half.
Korea Investment Management decided to sell the Vietnamese product in Japan because the Japanese market has paid keen attention to Vietnam. Japan is the largest official development assistance (ODA) donor to Vietnam. In 2012, Vietnam was offered the largest ODA loan for the year from Japan. With Japan’s record-breaking ODA to Vietnam, the two countries have amicable relations and Japan has more affection for Vietnam than any other countries.
Asset management companies are launching the funds, which are invested in Japan, in South Korea as well in line with the Japanese economy’s recovery. Samsung Asset Management Co. released the Japan High-yield Fund that invests in Japanese high-yield stocks last month. This product seeks out and invest in stocks that continuously provide a high level of dividends and form portfolios based on small and medium-capitalization stocks, especially Japanese small giants. An official from Samsung Asset Management said, “In fact, Japan Post Bank Co., which is a mid-cap stock, has about 60 trillion won (US$52.72 billion) of market capitalization, which is a similar level with South Korea’s SK Hynix Inc. with 67 trillion won (US$58.88 billion) and Renesas Electronics Corp., which is a small-cap stock, has 17 trillion won (US$14.94 billion) of market capitalization, which is about the same with South Korea’s conglomerate LG Electronics Inc. with 15 trillion won (US$13.18 billion). Japanese small and mi-cap stocks boast of potentials that can come near to any conglomerates in South Korea.” Mirae Asset Global Investments Co. also launched “Mirae Asset TIGER Japan Yen Futures Exchange Traded Fund” last month.
In addition, Korea Investment Management is planning to release Japan Fourth Industrial Revolution Fund in the domestic market as early as next month. It will be the first fund consisting of companies in the Japanese fourth industrial revolution industry. The fund will pick out and invest in companies related to the fourth industrial revolution in Japan that seek to improve the potentials of sustainable growth in the future by boosting up sales or continuously investing in research and development to generate relevant sales. When the Japan Fourth Industrial Revolution Fund is launched, the lineup of the fourth industrial revolution funds in South Korea, China and Japan will be completed.