KIC to Invest in Domestic Assets
By Lee Hyo-sik
Staff Reporter
The Korea Investment Corp. (KIC), the country's version of a sovereign wealth fund (SWF), will likely be allowed to invest in stocks, real estate and other assets here, a senior finance ministry official said Thursday. Currently, the company is permitted to invest only in bonds, stocks and other properties overseas, and banned from purchasing domestic assets.
The KIC was set up in 2005 to manage part of the foreign exchange reserves held by the Bank of Korea and the Ministry of Strategy and Finance in order to yield higher returns. But out of concerns that the company could become the government's piggy bank and be influenced by the government for political purposes, it has been barred by law from buying shares and other local assets.
Choi Jong-ku, director of the finance ministry's international financial division, told reporters that the government is considering ways to allow KIC to invest, in conjunction with foreign investors, in stocks and other properties here in a bid to attract more money from outside.
``Several foreign sovereign wealth funds are interested in local shares and other assets. Citing lack of information, they are asking domestic pension funds and other institutional investors to make an investment here jointly. To draw more dollars from outside, the government is considering ways of enabling the KIC and National Pension Service to jointly invest in local assets with foreigners,'' Choi said. He added that the ministry is moving to revise the law governing the management and operation of the KIC.
Touching on the international financial market, Choi said it was too early to say that the global credit crunch has eased. ``But it has become easier for local financial institutions to raise funds overseas. The Export-Import Bank of Korea and other local lenders have successfully issued dollar-denominated bonds in recent weeks. But we will continue to closely monitor market conditions and take necessary steps to stabilize the domestic market,'' he stressed.