South Korea's sovereign wealth fund suffers largest loss of $29.7 billion in 2022

By Park Yoon-bae Posted : February 15, 2023, 16:11 Updated : February 16, 2023, 01:39

[Courtesy of Korea IInvestment Corporation (KIC)]

SEOUL -- South Korea's sovereign wealth fund showed the worst performance last year since it was created in 2005, logging a loss of $29.7 billion (38 trillion won) due to falling stock prices and volatile debt markets, according to the fund's operator Korea Investment Corporation (KIC) on February 15.
In a KIC report submitted to Rep. Yang Kyung-sook of the main opposition Democratic Party of Korea (DPK), the sovereign fund posted a 14.36 percent loss in 2022 as it suffered the worst return in its portfolio investments since its launch.
The KIC said that its portfolio investments incurred a 17.58 percent loss -- 19.27 percent from stock investment and 16.65 percent from bond investments.
The fund's cumulative profit plunged 34 percent to $58.2 billion last year from $87.9 billion in 2021. The accumulated annual return rate also fell from 5.47 percent to 4.12 percent.
Stock investments accounted for 38.5 percent of the fund's total assets, while bond investments represented 31.5 percent, according to the KIC.
The fund's loss stemmed from falling share prices at home and abroad amid aggressive monetary tightening and the global economic downturn. It was also caused by declining bond prices amid interest rate hikes intended to fight inflation.
Rep. Yang said that the loss revealed the KIC's poor fund management skills. She pointed out that the purpose of the sovereign wealth fund is to contribute to the development of the financial industry by stably managing the assets entrusted with by the government, the Bank of Korea (BOK) and public funds.
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