Alternative Trials
Korea Investment Corporation (KIC) President Ahn Hong-chul held a press conference on Nov. 24 and apologized for the corporation’s investment in Merrill Lynch in 2008. The KIC had invested US$2 billion in Merrill Lynch shares in January 2008, but the appraised value is only US$1.28 billion now. “At that time, we made the investment based on not research but me-tooism,” he said.
In 2008, the KIC made the investment decision just a week after the official request. “The majority of our executive members were opposed to the investment at that time, but the decision was made fast after some remarks of a general manager at the Ministry of Strategy and Finance,” he added.
He also mentioned that the corporation would have to continue its investment in Bank of America, which acquired Merrill Lynch. “We thought about selling Bank of America shares for Wells Fargo shares, but reached the conclusion that it is not profitable,” he continued.
In the meantime, the KIC is planning to almost double its alternative investment ratio to 20 percent between this year and the next. Its target investment destinations include hedge funds, private equity, and real estate. The corporation’s alternative investment totaled approximately US$5.2 billion out of the total of US$60 billion as of the end of August 2014.
“We are planning to focus especially on real estate, in view of the size and rate of return,” the president explained, continuing, “When it comes to financial stock investment, we will not increase the ratio for the time being until the various scandals go away.”