After Being Jilted, Equities Gain Suitors

The recent sharp gains in the local stock market are renewing investors' interest in equities. There are signs that investors are pulling their money out of short-term money market funds and bond funds and shifting to equity funds.

Investors who bought stock funds between 1998 and early 1999, when share prices were climbing after the financial crisis, enjoyed a nearly 100 percent return rate.

In contrast, those who purchased stocks at the peak of the market in late 1999 suffered huge losses in the ensuing tumble.

Citing a market proverb, "Buy a straw hat in winter," experts say that investors should seriously consider buying a stock fund now, with the benchmark Korea Composite Stock Price Index below the 600-point mark.

More investors are confident that the main index hit bottom at 491 on April 10, and phone inquiries to investment trust companies about stock funds are rising.

As of Thursday, customer deposits at money market funds had shrunk by more than 11 trillion won ($8.5 billion) from a month earlier, whereas equity funds investments were up 100 billion won to 4.6 trillion won.

Some individual investors are also pouring money into small and medium-sized mutual funds, such as those managed by KTB Asset Management Co. and Midas Asset Management.

"Investors who cannot invest directly in stocks because they don't have time or information, may consider indirect investment through stock funds," said Choi In-kyu, a marketing manager at Korea Investment Trust Management Co.

Mr. Choi warned that those who want to buy the funds should not wait until share prices take off, looking for quick returns. "They should invest with a medium to long-term perspective."

by Chung Jeh-won