"We do not buy stocks with high prices, even if a company's fundamentals are excellent."
When asked by a reporter about the characteristics of institutional investor behavior observed in Europe, Ki Min-seok, head of Korea Investment & Securities' London office, replied, "There is a particularly high number of pension funds and funds that pursue value investing." He is recognized as a local expert who has led the office since 2019.
He added, "They have also expressed significant interest in Korean small- and mid-cap stocks," noting, "There is much curiosity about companies with diverse customer bases and clear export growth trends." European institutional investors tend to hold undervalued stocks for the long term, leading them to closely watch undervalued stocks among overseas companies. This is also cited as an area where Korean securities firms can leverage their strengths, as foreign-affiliated securities firms often lack coverage of undervalued small- and mid-cap stocks.
Long-term investing is a specialty of European institutional investors. The same applies to their assessment of major domestic companies such as Samsung Electronics. It is reported that many institutional investors have held long-term positions in Samsung Electronics since its share price was in the 50,000 to 60,000 won range. One firm is known to have focused on Korean semiconductor materials, components and equipment since the 2010s, generating record profits.
Jo Wan-jin, head of Samsung Securities' London office, said, "At investment roadshows for Korean companies, Asian fund managers mainly ask about short-term outlooks, while European managers frequently pose questions like 'What do you expect to be doing in two years?'"
With the recent rally in the domestic stock market centered on semiconductors, it is judged that the investor base for the Korean market is expanding, with growing interest not only in large-cap stocks but also in small- and mid-cap stocks such as materials, components and equipment. Interest is also high in export-oriented sectors beyond semiconductor materials, components and equipment, including defense, robotics, and cosmetics. A recent policy focus is resolving low PBR (price-to-book ratio) issues.
Han Jung-seok, head of Korea Exchange's London office, said, "The 'naming and shaming' (public disclosure of lists) announced by the exchange regarding low-PBR stocks received a positive response at an investor briefing with local investors," adding, "There is also considerable anticipation for the mandatory implementation of English-language disclosures."
However, there are acknowledgments that expanding businesses such as retail services presents challenges. A source at a local subsidiary said, "We have contacted European fintech platforms, but it seems the Korean market is not a priority in the retail sector," adding, "While nothing has materialized yet, we continue to look for opportunities."
Some securities firms are also knocking on the doors of family offices. Ki Min-seok said, "We have been making efforts to find 'old money,' which has long been widely distributed across Europe," noting, "As Samsung Electronics and SK Hynix have risen to become globally significant companies, and investment in the Korean stock market has gained attention due to rising share prices, we believe the likelihood of doors opening has increased somewhat."
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