Analysts Lament Lack of Activity by Institutional Players

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Analysts Lament Lack of Activity by Institutional Players

Domestic institutional investors should play a more active role as buyers, if local stock prices are to rise further following last week's gains, analysts say.

But local institutional investors are reluctant to make any big moves despite improving conditions in the stock markets. They bought shares of 95.4 billion won ($73 million) on Thursday but dumped 69.8 billion won of stocks on the following day, while foreign investors continued to be aggressive buyers both in the Korea Stock Exchange and the Kosdaq market.

Analysts say that local institutional players such as investment trust companies and securities firms are not strong enough to lead the equity markets. Customer deposits in stock funds managed by investment trust firms stood at 4.6 trillion won as of Sunday, compared with around 13 trillion won at the end of last June.

"Institutional investors don't have enough money to buy stocks aggressively," said Lee Ki-woong, a fund manager at Daehan Investment Trust Management Co. "Even if share prices are to rise, they cannot increase their stock portfolios because of strong redemption demands."

Insurance companies, which have reduced their exposure to stocks since last year's meltdown, are also taking a wait-and-see attitude.

Experts said they expect more investments by large pension funds would boost the local stock markets. The National Pension Corp., which plans to invest 2.9 trillion won in stock by the year's end, said that it will trust 600 billion won to asset management firms and pour an additional 100 billion won directly into stocks after June.

by Chung Jeh-won

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