The US market and its robust technology sector will continue to be at the core of Korea Investment Corporation’s (KIC) portfolio allocation, according to Hoon Lee, chief investment officer of the US$181 billion South Korean sovereign wealth fund.
Speaking at the recent Korea Pensions and Investment Forum organised by Asia Asset Management, he pointed out that US-centric investments has been dominant among KIC and other global asset owners over the past decade, a period during which the share of US exposure in major stock and bond indexes increased significantly.
He expects their US allocation to reach as much as 70% if the US outgrows other markets over the next five to ten years.
“We remain positive on the outlook of the US economy and believe the country’s technology sector will continue to be the driving force for global economic growth,” Lee said during a panel discussion at the forum in Seoul on May 30.
He also said KIC is looking for investment opportunities in Japan and China but that this will be done in a “selective and prudential manner”.
“The Chinese market has advantages and disadvantages,” he said. “On the positive side, unlike the global stock market rally in 2023, the Chinese stock market experienced a double-digit decline, making valuations significantly attractive.”
But he said the downside is that China’s property sector crisis has not been fully resolved, which may keep investors away.
The International Monetary Fund expects real estate investments in China to decline as much as 60% in 2026 from its peak in 2022.