Asset management firms have good Q2

The Financial district of Yeouido, western Seoul. [YONHAP]

Asset management firms did well in the second quarter backed by strong returns in equity investments, according to a preliminary earnings report from the Financial Supervisory Service (FSS) Thursday.

Net profit for 309 asset management companies hit a record 317.1 billion won ($267 million), up 169.4 percent from the previous quarter and a 49 percent increase compared to the previous year.

Yields on stock investments were particularly high, increasing by 180 percent, or 212.2 billion won compared to the first quarter. This contributed to a 137.2 percent increase in quarterly operating profits, which reached 315.7 billion won.

“Deposits and profits increased as Korea’s stock market made a recovery after hitting rock bottom in the early stages of the pandemic,” said an official from the FSS.

Korea’s Kospi stock index has showed a V-shaped recovery from 1,457.64 in early March to reach the 2,400 mark in August.

Total assets managed by operators also hit a new high of 1.2 trillion won as of the end of June, a 37.1 trillion won, or 3.2 percent, increase from March.

Deposits in fund investments increased the most, by 22.8 trillion won, or 3.5 percent, in the second quarter compared to the end of March, followed by assets entrusted for investment management, which increased by 2.9 percent or 14.3 trillion won.

Publicly offered funds remained popular. Assets invested in such funds increased by 19.7 trillion won, or 8.2 percent, compared to March, continuing an upward trend since 2018. Among them, money market funds and derivative investments sold well, while assets invested in equity-linked funds declined.

Private fund investments increased 3.1 trillion won, or 0.7 percent, from the end of March. Out of 234 private asset firms registered, 42.3 percent were in the red, possibly as a result of recent scandals in the private equity business.

Profits earned from fees were 680.4 billion won, a drop of 3.7 percent compared to the first quarter, but a 2.4 percent increase over a year earlier.

The FSS plans to continue monitoring changes in assets and financial statements of vulnerable firms considering looming risk factors and economic uncertainties arising from the coronavirus pandemic.

A total of 309 asset management companies were registered as of the end of June. Among them, 75 managed publicly offered investment products and 234 operated privately managed investments.

BY KANG JAE-EUN [kang.jaeeun@joongang.co.kr]