HMC’s various opportunities for profit-making under the CMCA framework
HMC Investment Securities, a subsidiary company of Hyundai-Kia Motors Group, is penetrating the pension fund and trust fund markets in order to achieve strong growth for the firm’s next generation after its trust fund dealership is approved on October 7, by virtue of the enactment of the Capital Markets Consolidation Act (CMCA).
In addition, applications for on-board derivatives and OTC (over the counter) derivatives are due for review. The firm also plans to expand its trust fund business by launching customized products such as Money Market Trust (MMT), Time Depositary Trust, and Fixed Income Trust.
The Money Bonds Trust and Wealth Trust will be strategically managed in order to create a unique profit pattern and investment strategy.
Accordingly, the firm, an authorized pension fund management institution as of June 2009, will complete the registration process needed to become a pension fund asset management institution in order to accelerate its entrance into the pension fund market as a licensed trust fund company. The pension fund market is expected to grow rapidly due to the curtailment of tax credit for the internal saving of retirement benefit reserves, and discontinuance of retirement insurance after 2010, thus the company is making a serious deal with the pension fund business.
In this respect, the new business will be beneficial for Hyundai Corporation as a whole since Hyundai Motors Group currently carries a retirement insurance and pension trust fund reaching a couple of trillion dollars and saves a hundred billion dollars every year for the retirement benefit reserves. The firm is aiming to be selected as a pension fund agency for major corporations in order to occupy a significant portion of the entire equity industry.
The firm plans to apply for the licensed dealership of both on-board and OTC (over the counter) derivatives. The brokerage of interest rate futures, currency futures, and commodity futures including traditional stock market index futures will be available under authorization of the on board derivative dealership, whilst various ELW and ELS products can be operated and merchandized under the permission of OTC derivatives business. The firm is also planning to establish extensive asset operations that will reach into hey are also establishing the full line of asset operation field reaching into equity, bond, futures, option, principle investment, global asset operation, system trading, and OTC derivatives.
One of the most prominent features of the firm that representing transformative era by the new law is to handle the ‘Truston Chingiz Khan Equity Fund.’ HMC Investment Securities recommended the product due to its high profit margin at 66.40% as of October 19, 2009 for Class A. The equity fund used to sort out underestimated stocks in terms of intrinsic value and invest directly into the shares instead of traditional equity tranches.
The overseas market is another strategic interest of the firm. The Beijing branch of HMC Investment Securities was approved in late September by the China Securities Regulatory Commission as part of its strategy to more effectively penetrate into the local market, in which Hyundai Motors, the affiliated firm of Hyundai Group, has already entered. HMC Investment Securities is expanding its overseas business in a bid to become one of the most prominent global financial investment companies in the world on the basis of its Beijing branch which is mainly involved with corporate financing, such as Project Financing in real estate development and Initial Public Offering (IPO).
“I am looking for the company to be on the steady orbit of rapid growth, a ‘second birth,’ I would call it, through the establishment of a full portfolio package including trust fund, pension fund, on-board derivatives, OTC derivatives, plus overseas business,” said Kim Hyuk, a director of the Department of Strategy Planning in HMC Investment Securities.