Investors Eyeing Overseas Investments

Kim, Ji-hyun (36), a housewife and resident in Osan, Gyeonggi, invested 130 million won in overseas fund.

The countries she invested in vary. Fifty million won was invested in a Japanese fund, 20 million won in European and Chinese funds, and the remaining 40 million in overseas REIT funds that target real estate.

Kim said, “I used to use domestic funds but starting one year ago, I have been interested in overseas equity funds and have diversified my investments.”

Na Jae-heon (31), who runs a restaurant in Suwon, is into directly investing in the Chinese and Hong Kong stock markets these days.

His investment amount is 30 million won and he has earned a high return of 50 percent from overseas investment last year. He added, “I studied books, but I mainly take advantage of the internet and research Chinese businesses and the stock market.”

Korean asset structures are changing.

As the number of individual investors who invest in overseas stocks and real estate is increasing, the ratio of overseas assets among Korean financial assets is going up. Some say that the second asset revolution following the domestic fund investment boom has started.

Dong-A Ilbo has commissioned Samsung FN to survey 514 customers who invest in stocks and bonds. The result showed that 43.8 percent of respondents said that they have assets invested overseas. In the survey, 77.3 percent of investors who have invested overseas said that it has been less than one year since they started to invest overseas. That reflects the recent excitement over overseas investment.

Statistics also prove the explosive increase in overseas investments.

According to the Bank of Korea, individual investor purchase amounts of overseas real estate jumped from 9.3 million dollars in 2005 to 514,200,000 dollars in 2006, a 55-fold increase.

Domestic investment in overseas funds increased from 12.4 trillion won in 2005 to 30.5 trillion won as of late last year, an increase of about 17 trillion won.

Jeong Yeong-sik, a researcher at the Samsung Economic Research Institute (SERI), made an analysis that as the strong won currency has led to strong purchasing power of domestic investors overseas, the weakened earnings rate from low interest rates, and diversified investment to minimize investment risks, played a role in the increase in overseas investment.

However, some voiced concerns by saying, “Investors are exposed to investment risks, such as the weakened securities market in Korea, which resulted from the acceleration of overseas investment and investment which is too focused on emerging markets such as China and Vietnam.”

ssoo@donga.com larosa@donga.com