All Eyes on Capital Group

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All Eyes on Capital Group

The Capital Group Companies Inc., a U.S.-based investment fund, may not be as well-known to Koreans as George Soros' Quantum Fund, but its influence on the local stock market is growing stronger.

"Financial markets across the world are swayed by every move the Capital Group makes, not to mention the Korean market," said a ranking official at the Ministry of Finance and Economy. "We can't take our eyes off its movement."

Founded in 1931, the Capital Group has assets of $325 billion under management and has invested 4 trillion won ($3.1 billion) in the domestic equity market.

The group has snapped up local blue-chip stocks such as Samsung Electronics Co., Samsung SDI and Hyundai Motor Co. through its subsidiaries, Capital Research & Management Co. and Capital Group International Inc. Therefore, top management of the Samsung units or the automaker never forget to visit the Capital Group to brief it on their management information. "The Capital Group sees Korea has a solid foundation for manufacturing businesses like semiconductors, automobiles and steel, among emerging markets," said Hwang Bong-mok, who heads the international team of Samsung Securities Co.

Capital Research & Management, which manages pension funds, has continued to buy shares of Samsung SDI since last September, raising its stakes in the display panel maker to 8 percent. Capital Group International already holds 12.1 percent of the firm.

The group has also secured 5 percent of Cheil Communication, the nation's biggest ad agency, and owns nearly 5 percent of Pohang Iron & Steel Co.

It is the third biggest shareholder of Samsung Electronics with a 5 percent stake. It also has an 11.4 percent stake in Samsung Electro-Mechanics and 8.1 percent in Hyundai Motor. Other major domestic firms in which the equity fund owns more than 5 percent include Kumgang Korea Chemical, Mediso, Samsung Fire & Marine Co. and KorAm Bank.

"In the domestic stock market, the Capital Group is bigger than other global funds such as Fidelity, Warburg and Templeton," said Chon Byeong-seo, head of the research team at Daewoo Securities Co. "Unlike hedge funds, which seek short-term profits, the group is a long-term investor and helps support the local equity market."



by Huh Kwi-shik

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