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| Korea Investment Corporation (KIC) headquarters in downtown Seoul / Courtesy of KIC |
The Korea Investment Corporation (KIC), a sovereign wealth fund in the country, posted its worst investment loss in its asset evaluation for the first half of this year.
According to data submitted by the KIC to main opposition Democratic Party lawmaker Yang Kyung-sook, the KIC logged a 13.83 percent investment loss during the first six months of this year. Given that the KIC's assets stood at around $205 billion at the end of last year, it means that the sovereign fund's evaluated asset has been reduced by around 39 trillion won ($28 billion) during the first half of the year.
The sovereign wealth fund's investment loss in overseas stocks stood at 21.17 percent, and in bonds at 14.04 percent. Stocks account for about 40 percent of KIC assets, while bonds take up some 35 percent. The KIC is also estimated to witness losses in alternative investments, including real estate and infrastructure investments, for the first quarter.
Market insiders explain that the losses by the KIC are just a reflection of investment returns from the six-month period alone ― and do not represent a confirmed or actualized loss ― and the investments are bound to recover when external economic conditions ameliorate. But the poor performance in the first half still hurts. With the H1 investment returns included, the KIC's accumulative investment returns decreased to 8.61 percent, from a previous figure of 8.83 percent at its launch in 2005.
"The sovereign fund needs to raise its profitability, while securing more stability, by examining its investment policies, operation strategies and risk management," Rep. Yang said.
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