Universities hit hard by investment losses
By Yun Suh-young
Several universities registered huge losses from investments in financial derivatives, according to recently released financial data sheets.
Korea University (KU) reported the largest loss of 9 billion won from its investments.
Kyungnam University in South Gyeongsang Province recorded a 300-million-won loss from funds and equity-linked securities.
Sogang University incurred a 75-million-won loss from stocks, while Myungji University lost 6 billion won from lending money to the school foundation-affiliated company to build retirement homes but was never paid back.
The four universities were an exception to the norm of how universities usually manage their money. Most of the universities invested in safer products such as bank savings or bonds. The universities that invested in safer products tended to pour over 90 percent of their financial assets into savings.
According to data from Korea University for the previous fiscal year, the KU Foundation invested about 48.1 billion won in stocks and other securities whereas only 9.4 billion won was invested in risk-free assets.
Out of the securities, the university put 37 billion won into equity-linked securities (ELS). After a year, however, it resulted in 9 billion won loss due to the plummet in stock prices.
Because of the poor management of school funds, Kim Jeong-bae, chairman of the school’s board, resigned from his post in April.
Kim was accused of directing the investment using a cash reserve that grew due to a rise in tuition fees and donations.
Other universities also suffered losses due to poor management of their school funds.
Some universities invested in stocks that had little chance of stable returns. They even invested in newly launched general programming cable channels that are suffering from financial difficulties.
There were rare cases of universities making profits, such as Sungshin Women’s University and Sahmyook University that both saw earnings from investments in stock-managed funds and equity-linked securities.