It was found that companies have increased their stock investment significantly since last year. It is analyzed that there is a change in the method of fund management, which was one change in safe assets such as deposits and bonds due to the influence of ultra-low interest rates. There are also cases of buying overseas stocks as well as high-quality dividend stocks and public offering stocks in Korea. It is expected that more and more companies will find investments with a high return of 1% and use some of their money in the stock market.
Companies indulged in large-cap and public offering stocks
According to five major domestic securities companies, including Mirae Asset Daewoo, Korea Investment & Securities, Samsung Securities, NH Investment & Securities, and KB Securities on the 21st, the amount of stock purchases by general corporations surged by 23 trillion won last year. It has increased significantly from 16 trillion 122.2 billion won in 2019 to 39,221.7 trillion won in 2020. Samsung Securities saw a 416% increase in corporate stock purchases in 2020 from the previous year.
The reason why company funds, which consider’principal guarantee’ as their top priority, flowed into the stock market is due to the prolonged ultra-low interest rate. Company A, a cosmetic raw material manufacturer headquartered in the metropolitan area, started investing in stocks from last October with corporate funds that had been managed as a three-month short-term bond and deposit. The first investment is 30 billion won. They mainly bought large-cap stocks such as Samsung Electronics, LG Chem, and Hyundai Motor, which have high stability. At the end of last year, after making a good profit, the investment amount was increased to 100 billion won. An official of the company said, “For the time being, we expect the stock investment yield to outperform the deposit interest rate, so we plan to increase the share of stock investment a little more.”
The number of corporations that trade in stocks has increased. Last year, the number of corporations that purchased stocks through Samsung Securities counters increased to 2097, about twice that of a year ago (1002). The increasing demand to remove the company’s funds stored in the deposits and move them to higher investment destinations, even 1% per year.
Corporate funds are also rushing into the public stock market, which is enjoying an unprecedented liquidity party. An increasing number of companies are investing tens of billions of dollars in subscription to public offerings scheduled for IPO. Even if the public offering stocks invest in stocks, which are risky assets, the initial price on the first day of listing is determined at more than 90% of the offering price, so investment stability is high.
This year, corporate funds continue to flow into the stock market. By the end of February of this year, the stock transaction amount of the corporation was estimated to exceed 10 trillion won. Kang Hwan-gu, head of the Sales Department of NH Investment & Securities Corporation, said, “Among small and medium-sized companies, companies that are steadily growing are often contemplating various fund management methods as liquidity becomes abundant. , It is being introduced as an alternative investment product,” he explained.
I also opened my eyes to overseas stocks.
Companies that have invested in overseas stocks are also increasing. According to NH Investment & Securities, corporate new overseas stock trading accounts increased 2.4 times from 566 in 2019 to 1353 last year. Until March 17 this year, 544 new accounts were opened.
Seohee Construction, a mid-sized construction company, is a representative. Seohee E&C invested only in domestic stocks such as Samsung Electronics, Samsung Biologics, and Kakao in 2019, but last year expanded the scope of investment to overseas stocks such as Apple (AAPL), Tesla (TSLA), and Amazon (AMZN). It has also invested in ETFs related to cloud computing of global managers such as First Trust, Global X, and Wisdom Tree, as well as global semiconductor companies such as Qualcomm and NXP Semiconductors. As of the end of last year, domestic stocks amounted to 48.8 billion won and overseas stocks reached 51.2 billion won.
BC World Pharmaceutical also started investing in overseas stocks for the first time last year. At the end of last year, 15 of the 16 investment items were foreign companies. It has invested in medical industries such as Hangseo Pharmaceutical, a new drug development company in China, and Global X Telemedicine & Digital Health ETF (EDOC). In addition, investment in eco-friendly stocks such as Global X Clean Tech ETF (CTEC), GLOBAL X China Clean Energy ETF, and US hydrogen company PLUG was high.
Electronics manufacturer Kyungin Electronics bets on a startup. It is investing 230 million won in Snowflake, an American service company. Snowflake is a company that has attracted attention for the fact that Warren Buffett, Chairman of Buckshire Hathaway, has invested in the company’s public offerings. US vegetable meat maker Beyond Meat also holds 200 million won worth of stock.
MMT balance is also the highest ever
As companies’ interest in the management of surplus funds has increased, the balances of the Special Money Trust (MMT) and Money Market Fund (MMF), which are classified as ultra-short-term financial products, have also increased by nearly 40 trillion won over the past year. MMT and MMF are very short-term investment products that can be invested in a day or two. The idle cash is invested every day or two and used to earn higher interest than the bank account. The MMT balance, which stood at 71 trillion 77.2 billion won in January last year, has risen to 91.287 trillion won, the highest this year.
Similar to MMT, MMF, a fund that invests in short-term financial investment products such as short-term bonds, drafts, and transferable deposit certificates (CD), also increased by 18.69 trillion won over the same period. An official at a securities company explained, “In particular, MMT is so popular with corporations that about 90% of the balance is estimated to be the surplus funds of general corporations.”
Jaewon Park/Beomjin Jeon/Reporter Hankyung [email protected]