September 2020
AAM Magazine
September 2020
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Korea asset managers’ first-quarter income dives amid pandemic

South Korea’s 300 registered asset managers’ net income plunged 52.3% year-on-year to 116.4 billion won (US$97.8 million) in the first quarter, and almost two-thirds incurred losses as stocks were battered by the coronavirus crisis and US-China trade tensions, according to the Financial Supervisory Service (FSS).

The asset managers’ revenue from fees and commissions declined 16.4% to 706.2 billion won, and was down 4.4% from the fourth quarter of 2019, the regulator says in a statement on June 11.

Their average return on equity in the first quarter plunged to 6.1% from 15.7% in the same period of 2019.

The Korea Composite Stock Price Index fell 19.7% year-on-year in January through March, the benchmark’s worst ever 12-month performance.

“Of the 300 management companies, only 113 were in the black in the January-to-March period,” the FSS says, adding that the share of loss-making managers jumped to 62.3% from 35.3% in the first three months of 2019.

Markets conditions were “very challenging” during the period with many Korean managers hit by outflows from various funds and declines in portfolio valuations, according to a fund manager based in Seoul.

“The industry should see a gradual rebound in terms of capital flows from the second quarter as the coronavirus outbreak in the country has been under control. Also, investors’ confidence is recovering,” the manager tells Asia Asset Management, speaking on condition of anonymity.

South Korean asset managers had 1,149 trillion won of total assets under management as of March 2020, compared to 1,053 trillion won a year ago, the FSS says.