Investors Advised to Forget Past Investment Return
By Yoon Ja-young
Staff Reporter
One should not expect investment return to be as high as the past few years amid stagflation, claimed the CEO of ING Investment Management.
``Investors should have rational expectation on investment return. I would call it excellent if investment return is around 4 to 8 percent higher than the deposit interest rate,'' said Choi Hong, CEO of ING Investment Management, in a press interview Tuesday.
He said high international oil prices are unlikely to change course in the near future. ``If speculators are manipulating oil prices, one should first think about why they are speculating. The answer is increasing demand. The populations of China and India add up to over 2 billion, and the oil price has downward rigidity. Once you start driving a car, it's difficult to go back to public transportation,'' Choi said.
He said investors should check their portfolios amid stagflation. ``One should look for investment products that could hedge against inflation. They should also look for funds that provide a more stable portfolio. The hit and run strategy of the past is likely to fail now.''
Choi said foreign investors' sell-off from the Seoul bourse isn't likely to stop in the near future. ``I think we still have two-thirds of the subprime mortgage trouble to come. The government's lowering of the won/dollar rate also motivated foreigners to sell stocks, as they can get 5 to 7 percent of additional investment return.''
The investment management company released the ING Investor Dashboard Sentiment Index for Asian countries, according to which Korean investors were the most pessimistic.
Korea was the only country among the 13 Asian countries that had the sentiment index continuously fall from the third quarter last year through the second quarter of this year. While the average index for Asian countries was 109 for the second quarter, the figure was 87 for Korea. The score ranges from 0, the least optimistic, to 200, the most optimistic.
``Koreans were most severely hit by the oil price hike. Other countries like Malaysia and China have oil subsidies. Korea, meanwhile, levies high taxes. The oil price hike is fully reflected in the economy,'' Choi said.
He added that disappointment with President Lee Myung-bak, who started the term amid high expectations, also darkened investor sentiment. Taiwan, which also saw a new leader this year, meanwhile, is seeing investors turning positive.