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KIC was set up two years ago as a sovereign wealth fund roughly along the lines of SingaporeÆs Government Investment Corporation. It has two clients, the Bank of Korea and the Ministry of Finance and Economy. The BoK gave it $17 billion of its foreign exchange reserves while another $3 billion came from MoFEÆs own account of foreign reserves.
KIC, like any other asset management company, garners institutional investment fees from these two as its clients. The investment guidelines vary as well. AsianInvestor does not know the specific differences but the MoFE account is more flexible and aggressive, allowing more tracking error.
Fund managers now say KIC will get a new injection of $20 billion next summer, after it has fully invested its first tranche. But market rumour has it that the next injection will be evenly split between BoK and MoFE, which delights fund managers as it means they will be allowed to manage accounts more actively.
KIC officials declined to comment.
KIC currently invests in eight buckets. For global fixed income and global equities, it has passive, enhanced and active mandates; plus it has allocations to internal teams managing global fixed income and global equities. It outsourced passive fixed income 11 months ago and has since fully invested the two passive and enhanced buckets, as well as the fixed income mandate for its own team. That leaves the active mandates for equities and bonds, as well as its internally managed equities mandate, yet to be fulfilled.
Fund managers say the KIC is keen to expand into alternative asset classes next year with additional asset injections from MoFE, and believe the organisation is already doing basic research to see how exposures to private equity, hedge funds, real estate or infrastructure would fit into its portfolio.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.