By Anna J. Park
The Korea Investment Corporation (KIC), the nation's state-run investment organization, has raised eyebrows following the revelation that the sovereign wealth fund lost about 10 billion won ($8.7 million) through an investment in marijuana-related companies.
According to four-term ruling party lawmaker Jung Sung-ho, the state-run fund has invested about 20 billion won over the last two years in cannabis companies listed on U.S. stock markets, such as Canopy Growth, Aurora Cannabis and Cronos Group, and has lost about the half of the investment so far.
Jung looked into company disclosure materials released by the U.S. Securities and Exchange Commission (U.S. SEC) and found that the KIC purchased about $18 million worth of Canopy Growth stock during the first quarter of last year. However, the price per share has been on a downward spiral from $50 ― when the KIC invested ― to about $23.47 at the end of last week.
"Every country has a different set of value systems and social standards. Socially responsible investing should be adjusted to each country," Jung said, adding that the KIC's investment should not go against public sentiment in Korea.
The listed Canada-based companies not only produce medical marijuana products, but also recreational cannabis. Unlike some states in the U.S. or Canada that legalized adult-use of marijuana, the use of recreational cannabis is still illegal in Korea, where only a limited use of medical marijuana is allowed.
Regarding such criticism, an official from the KIC said the corporation cannot make a specific comment about its investment.
"As a matter of principle, the KIC cannot release any information about its specific investments or detailed information about its investment records," the official said via telephone.
An industry source familiar with the KIC told The Korea Times that the corporation fully understands the importance of socially responsible investment, adding that the corporation's investment in these companies must've come from the fact that these firms are included in benchmark indices.
"About 40 percent of the KIC's assets, which is probably about $70 billion, are invested in thousands of global stock items," the source said on condition of anonymity.
"It's like the state-run corporation invested in most of every stock listed in major global stock markets that are included in benchmark indices," the source continued, adding that these companies are mainly focused on medical marijuana products and any companies involved in illegal businesses cannot be listed on U.S. stock markets in the first place.
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| The headquarters of Korea Investment Corporation (KIC) / Courtesy of KIC |
According to four-term ruling party lawmaker Jung Sung-ho, the state-run fund has invested about 20 billion won over the last two years in cannabis companies listed on U.S. stock markets, such as Canopy Growth, Aurora Cannabis and Cronos Group, and has lost about the half of the investment so far.
Jung looked into company disclosure materials released by the U.S. Securities and Exchange Commission (U.S. SEC) and found that the KIC purchased about $18 million worth of Canopy Growth stock during the first quarter of last year. However, the price per share has been on a downward spiral from $50 ― when the KIC invested ― to about $23.47 at the end of last week.
"Every country has a different set of value systems and social standards. Socially responsible investing should be adjusted to each country," Jung said, adding that the KIC's investment should not go against public sentiment in Korea.
The listed Canada-based companies not only produce medical marijuana products, but also recreational cannabis. Unlike some states in the U.S. or Canada that legalized adult-use of marijuana, the use of recreational cannabis is still illegal in Korea, where only a limited use of medical marijuana is allowed.
Regarding such criticism, an official from the KIC said the corporation cannot make a specific comment about its investment.
"As a matter of principle, the KIC cannot release any information about its specific investments or detailed information about its investment records," the official said via telephone.
An industry source familiar with the KIC told The Korea Times that the corporation fully understands the importance of socially responsible investment, adding that the corporation's investment in these companies must've come from the fact that these firms are included in benchmark indices.
"About 40 percent of the KIC's assets, which is probably about $70 billion, are invested in thousands of global stock items," the source said on condition of anonymity.
"It's like the state-run corporation invested in most of every stock listed in major global stock markets that are included in benchmark indices," the source continued, adding that these companies are mainly focused on medical marijuana products and any companies involved in illegal businesses cannot be listed on U.S. stock markets in the first place.
