Overseas Financial Investment
The Korea’s National Pension Service (NPS), the world’s third largest public pension, and sovereign wealth fund Korea Investment Corporation (KIC) will commission local financial firms to make investments overseas.
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Korea’s sovereign wealth fund decided to offer Korean banks opportunities to handle foreign exchange transactions for its overseas investments. Lee Dong-ik, chief investment officer at the fund, said on October 9, “We have had to turn to foreign banks for cross-currency transactions for a variety of reasons. We are now, however, seriously considering assignment of such services to our domestic banks that have proven competent,” adding, “We could be able to work together within this year.”
The KIC receives US dollar-denominated funds from the government and the Bank of Korea, and converts 60 percent of them into different currencies needed for cross-currency deals before making investments, totaling US$20 billion to US$30 billion on annual base. The sovereign wealth fund started already working together with domestic securities firms for stock and bond investments abroad from this year, and has now decided to give equal opportunities to domestic banks.
The NPS pays higher salaries (around 100 million won, US$92,900) to foreign asset handling managers than domestic asset managers to help win foreign investor confidence.