Movers & Shakers from HK Control Korean Securities Market

The financial crisis in late 1997 was partly caused by capitalists of the global money market who cut the money pipeline for Korea. Specifically speaking, about 30 investment analysts of Hong Kong-based securities trust companies, who made decisions on investment into Korea, doubted domestic financial institutions’ payment capabilities and stopped investment.

Even after Korea received IMF’s bailout fund, financial circumstances got worsened for the time being. It was because Korea failed to raise the hope of Korean won’s appreciation. The government attempted to resolve economic problems by waging campaigns, asking the people to restrain themselves from withdrawing deposits and collect dollars at home and appealing large corporations not to amass dollars. Such campaigns were not enough to satisfy cold-hearted economists.

Therefore, the government carried out its promises with the IMF, including reforms of the financial sector and chaebol, the closing of non-viable merchant banks, bank recapitalization, the expansion of foreign exchange fluctuations, and the accommodation of global standards, and sent signals of the market stability to economists. Consequently, circumstances began to improve.

▽As long as the Korean securities market is concerned, ask securities experts from Hong Kong.

These days, those who are working or once worked at European and American securities companies in HK are the movers and shakers of the Korean securities industry. They have learned advanced financial techniques in HK, where Asian headquarters of American and European securities companies are concentrated, and speak English fluently, playing the dominant role in the Korean securities market as foreign investors.

In addition, they can mobilize an enormous amount of fund, utilize a global research network of foreign securities companies, and meet CEOs of Korean corporations face to face. In other words, they can grasp three elements such as buying and selling of foreigners, economy, and companies, which have a great influence on stock prices, at the same time. Therefore, they can make a differential analysis on the Korean stock market, compared to domestic experts.

▽ From HK to Korea

Not a few fund managers of foreign financial institutions have come to Korea. Park Yun-soo, executive director of LG Investment & Securities, worked for Jupiter Asset Management (HK) and Prudential Asset Management (UK) for ten years and has become a research head. He earned MBA at Sungkyunkwan Univ., advanced into Hong Kong thanks to his excellent English, and served Seoul branch of Salomon Smith Barney (SSB) securities as a research head.

Lim Sun-geun, head of Deutsche Securities in Korea, was a fund manager of Jardin Fleming Asset Management and is now in charge of sales. Lee Jung-chul, executive director of Templeton Investment Management, took part in the fund management at Korea Asia Fund (KAF), one of foreigner-only funds, and worked for Baring Asset Management (HK) as a fund manager.

Executive director Lim Chun-soo, who became the research head of Samsung Securities in June, had served Goldman Sachs Securities after graduating from UC Berkeley and taken in charge of research in HK and Seoul. He founded Internet education website Baeoom.com and has returned to the securities industry in two years.

Lee Nam-woo, former research head of Samsung Securities, recently established Recapital Investment Advisory to be on his own. He earned MBA at Chicago University and worked at such companies as Daewoo Securities, JP Morgan Securities, and Jardin Fleming Asset Management as analyst. After serving Dongbang Peregrine Securities, the first joint securities in Korea, as research head, he moved to Samsung Securities.

Lee Jae-woo, head of Lehman Brothers Securities in Korea, is also from Hong Kong. He once worked for City Bank (HK) and served H&Q Korea, which merged Goodmorning Securities in the Asian financial crisis. Nam Jong-won, head of Merrill Lynch Securities’ Seoul branch, and Executive Director Kim Dong-yeol climbed up the corporate ladder up to Managing Director (MD) rarely as the Korean people. Chairman of the Carlyle Group Kim Byung-joon and Executive Director of Warburg Fingers Hwang Sung-jin, which invested into Koram Bank and LG Card respectively, are big wheels in private equity investment.

▽ Who remains in Hong Kong?

The most conspicuous Korean figures in Hong Kong are Kim Hun-soo, executive director of Merrill Lynch Securities and Asia research head, Hwang Sung-joon, executive director of CSFB Securities and Asia research head, and Yun Chi-won, executive director of UBS Warburg Securities and Asia securities and derivatives head. Mr. Kim and Mr. Hwang are alumni of Chicago University and Mr. Yoon received MBA at MIT. They rose even to the MD post. In particular, they work as Asia heads in charge of about ten countries like Korea, HK, Singapore, and Taiwan.

David Choi of Jardin Fleming Asset Management is the most typical fund manager. From 1999 to 2000, during which the Korean stock market prospered, he served Hyundai Securities and Seoul Securities for a short period of time and went back to Hong Kong. Director Oh Sun-hee of Standard Life is changed from an analyst to a fund manager at Tongyang Securities. The director visited Alliance Capital, a Singapore investment company, to sell overseas convertible bonds but was recruited by the company. The most noticeable bond fund manager is Hong Jun-ki, Executive Director of UBS Warburg. He managed bonds as Asia head and is now in charge of bond investment into Latin America in the United States.

“The global financial market evaluates a person only with his or her own competence,” said Lee Won-ki, executive director of Merrill Lynch Securities. “In 10 to 20 years, the Korean people will have the influence equivalent to that of the Jewish in the international financial circle.”

Chan-Sun Hong hcs@donga.com