Super-rich Koreans eye return to stocks despite weaker economy

The super-rich in South Korea are eyeing stocks for investments despite a slowdown in Asia’s fourth-largest economy this year, expecting the local equity market to rebound after the second half of 2023.

The wealthy with total assets of 30 billion won ($22.7 million) or financial assets of 10 billion won see stocks as their preferred investment going forward, according to a Hana Financial Group research institute report on Sunday. Their second favorite was real estate although the property market is expected to weaken further this year, the report said.

“The Kospi is widely expected to rebound after the second half of 2023, while real estate is predicted to revive after 2024,” the institute said.

In 2022, the affluent cut stock holdings in their total assets to about a third compared to the previous year, more than doubling their cash and savings in search of safety. About 70% of them made profits from safer financial assets such as savings, bonds, funds and trusts. Most of them suffered losses from stock investments.

CASH WAS KING

The super rich’s total assets fell 13.4% to an average of 32.3 billion won in 2022 with real estate down 24.2% to 15.6 billion won.

Their financial assets grew 7.3% to 16.1 billion won last year as they rushed to safer assets with their cash and savings making up 58% of total assets, much higher than the 25% portion in 2021. Stocks accounted for only 16% due to sluggish local equity markets, compared with 45% in the year prior. 

About three-quarters of the deep-pocketed held foreign currencies in their cash holdings. The more financial assets they have, the more overseas assets they hold with cash, savings and stocks preferred in that order.

The affluent are also interested in art for investment with 41% of them already holding pieces worth more than 100 million won.

The annual income of the super-rich slid 21.7% to 1.2 billion won on average last year. They still earned income mostly from their assets, which made up 59% of their total profit. Most of them saved 57% of their income, spending 37% on consumption and 6% on loan repayments.

About a third of the super-rich were corporate executives and a fifth were medical and legal professionals. Most of them live in Gangnam, one of the richest areas in Seoul, and its neighboring districts.

Write to So-Hyun Lee at y2eonLee@hankyung.com
 
Jongwoo Cheon edited this article.