The ‘512 Trillion Won Investment Network’ Shaken by Relocation to the Provinces ... Mutual Aid Associations and KIC Push Back [fn Market Watch]

[Financial News] Assets managed by leading domestic mutual aid associations and the Korea Investment Corporation (KIC) total 512 trillion won, and controversy over their relocation to the provinces is escalating into a debate over the competitiveness of Seoul’s financial market. The concern is that the move could affect more than the locations of public institutions, potentially disrupting networks for investment in global private equity funds (PEFs), real estate and infrastructure. A conflict has also come to the fore between the policy goal of developing Seoul into an Asian financial hub and plans for balanced regional development.
According to the investment banking (IB) industry on the 5th, the Council of Mutual Aid Association Labor Unions and the KIC labor union met with Park Chan-gu, Seoul’s deputy mayor for political affairs, the previous day. They conveyed concerns that relocation to the provinces could weaken the competitiveness of the financial industry and called on the Seoul Metropolitan Government to take notice and respond.
The central issues in the meeting were the scale of assets under management and investment networks. As of the end of last year, the assets of the eight major mutual aid associations totaled 179.4487 trillion won. Adding KIC’s assets under management of $232 billion (about 333 trillion won) brings the total to more than 512 trillion won. These institutions are major institutional investors in global capital markets, investing in domestic and foreign stocks and bonds as well as PEFs, private credit, real estate and infrastructure.
The unions argued that, with alternative investments accounting for 60–70% of the portfolios of major mutual aid associations, a physical relocation could hamper deal sourcing, investment decision-making and risk management. They said the concentration benefits of having financial institutions in close proximity could weaken, given that alternative investments require close collaboration among overseas asset managers, investment banks (IBs), and legal and accounting advisers. The council said, “If mutual aid associations leave Seoul, their established connections with global investment institutions will inevitably diminish,” adding, “This will also affect the standing of Seoul’s financial ecosystem.”
The KIC labor union proposed connecting global investment networks with regional economies instead of relocating to the provinces. Jang Ju-ho, chair of the KIC labor union, stressed, “Channeling foreign capital into regional projects and directing the resulting benefits back to the regions can contribute to meaningful balanced regional development.”
The controversy is also tied to the government’s vision of “Seoul as the economic capital and Sejong City as the administrative capital.” Seoul Mayor Oh Se-hoon has also expressed concern that relocating financial institutions to the provinces could weaken Seoul’s financial competitiveness.
Meanwhile, a view has emerged in the IB industry that “the key is how to maintain links with global asset managers and preserve investment-screening personnel and decision-making functions, rather than the relocation of the institutions itself.” One industry insider noted, “The impact of relocation to the provinces on actual investment performance needs to be verified, so debate is expected to continue over the benefits of financial-sector clustering and the practical benefits of balanced regional development.”

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