Top financial executive taking cautious stance on equities

People

Published: 11 Mar. 2011, 21:37

Top financial executive taking cautious stance on equities

Kim Nam-koo

Kim Nam-koo, chief executive of Korea Investment Holdings, was promoted to vice chairman on March 1. Kim has a 20.2 percent stake in the company, which his father Kim Jae-chul, chairman of Dongwon Group, inherited. However, Kim has worked his way up the corporate ladder, which has established his reputation in the midst of the financial crisis as a skilled investor with a modest attitude.

With the government encouraging the growth of Korean financial firms into global investment banks, Korea Investment Holdings is seen as a leading contender to achieve this goal.

Affiliates of Korea Investment Holdings have gained strength, with Korea Investment & Securities being ranked No. 1 in domestic initial public offerings and No. 2 in corporate bond issues last year.

Q. Affiliates of Korea Investment Holdings seem to be doing well. Why?

A. We’ve done well in risk management during the bursting of the financial bubble in 2007 and 2008. Back then, emerging markets, which centered on China, were doing great. We had a lot of people saying that our company must make inroads into China as soon as possible. So I asked them, “What do we need to do in order to earn money there?” But they couldn’t give a perfect answer. Most people were saying how we would be losing an opportunity to other companies that were making inroads in China. But I decided that it wasn’t right. Even if there are many fish in the Pacific Ocean, we could be swept away by the waves if we have no fishing nets or the ability to catch fish.

Kim instead came up with a marketing system and financial products for overseas markets, including China, under the judgment that there needed to be more training in the domestic market before making inroads into foreign countries.

Kim’s management philosophy is based on his experience. Before graduating from college, Kim voluntarily worked on a deep-sea fishing vessel owned by his father’s company. For five months, Kim worked for 16 hours every day in the bitter cold. And he learned the lesson that life is not easy.

What is your forecast for the stock market?

I came up with my outlook for the stock market after a discussion with my workers using storytelling techniques. In conclusion, we all agreed to approach the market in a conservative manner. Most brokerages are forecasting that the Kospi will hit in a range of 2,600-2,700 points this year, but we think differently. Our forecast is for a maximum of 2,250. The U.S. economy is forecast to post better-than-expected growth this year, possibly up to 3.8 percent. Therefore, increased consumption in the U.S. will eventually push up international energy prices such as oil, and Korea’s current account surplus will eventually be reduced. Inflationary pressures will also restrict Korea’s economic growth. Therefore, investors should not have high expectations for the stock market this year. We should have more focus on risk management.

By Kim Kwang-ki [jyj222@joongang.co.kr]