Survey Shows Wealthy People in South Korea Are Investing into Stocks Less

Aug 07, 2018

Percentage of stocks out of financial assets owned by wealthy people in South Korea has been reduced by 50% due to lower expectations towards stock markets from foreign risks and others.
According to ‘2018 South Korean Wealthy People report’ issued by KB Financial Group Research Institute, percentage of stocks out of financial assets owned by wealthy people in South Korea (more than $888,000 (1 billion KRW)) in individual asset) fell from 20.4% in 2017 to $11.8%. This percentage is the lowest value since 2011 when KB Financial Group Research Institute started this research.
Their level of expectations towards stock markets has gone down significantly due to effects such as Interest rate raise from the U.S., trade conflict between the U.S. and China, and slow economies of rising nations.
This percentage is significantly low compared to other countries. While stocks take up 24% of assets owned by wealthy people in South Korea, percentages of stocks out of personal assets owned by wealthy people in North America, Western Europe, and Japan and Australia are 58%, 40%, and 37% respectively. On the other hand, percentage of cash out of personal assets owned by wealthy people in South Korea is 56% compared to that of 15%, 37%, and 43% from North America, Western Europe, and Japan and Australia respectively.

Percentage and trend of assets owned by wealthy people in South Korea (Reference: KB Financial Group Research Institute) <Percentage and trend of assets owned by wealthy people in South Korea (Reference: KB Financial Group Research Institute)>

While percentage of investments is on decline, expected annual rate of return by wealthy people in South Korea is going up continuously as it has gone from 9% in 2015 to 20% in 2018. KB Financial Group Research Institute believes that this phenomena is not yet corrected of high standard towards rate of return formed along with booming of stock markets. 30.5% of wealthy people in South Korea are expecting rate of return to be between 10 and 20% through stock investment while 28.7% of them expect more than 50% in rate of return.
Percentage of people investing into KOSDAQ (77%) exceeded that of KOSPI (76%). This reflects recent trend of stock market that prefers investment into KOSDAQ market. Increase rate of index of KOSDAQ was 40.4% during one year span just prior to the start of this year’s survey and it is 4 times higher than that of KOSPI.
Number of total stocks owned by wealthy people in South Korea is about 10 times bigger than that of regular investors in South Korea as risk-taking capability goes up as amount of assets becomes bigger. Average appraised value of total stocks owned by wealthy people is $320,000 (360 million KRW) and it is significantly bigger than that of regular investors which is $31,000 (34 million KRW).
On the other hand, only 2% of wealthy people have tendency to invest into cryptocurrency in the future as they are doubtful about future growth of cryptocurrency.
This percentage is significantly low compared to how 29% of wealthy people from all around the world and 52% of wealthy people from Asian countries excluding Japan are interested in investing into cryptocurrency.
Staff Reporter Gil, Jaeshik | osolgil@etnews.com

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