KOR

Research Staff

Research Staff

Song, Hong Sun Senior Research Fellow Fund&Pension

Profile

Publications

Overhauling Korea’s Trust Service Industry in the Era of Rapid Aging Senior Research Fellow Song, Hong Sun and others / Feb. 03, 2021
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Facilitating shareholder engagement in Korea Senior Research Fellow Song, Hong Sun / Feb. 21, 2018
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Demographic Changes and Stock Market: The OECD Experience Senior Research Fellow Song, Hong Sun and others / Feb. 08, 2017
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Opinion

Development of Custodian Services in the Direction Towards a Healthy Fund Ecosystem / Jul. 13, 2021
Recently in Korea, more and more fund custodians are refusing services to privately placed funds. However, such a market failure is expected to be addressed given recent market improvement after a revision of the Financial Investment Services and Capital Markets Act. The improvement includes an upward trend in custodian fees, more clear guidelines on custodian responsibility, and cost effectiveness via FundNet. Nevertheless, for Korea’s fund custodians to make another leap forward, they should overcome their passive image as an ancillary service provider, and seek to come up with new strategies pursuing high-added-value business opportunities out of stronger custodian responsibility and right they will enjoy after the revised legislation takes into effect. On another front, the current market failure where custodians pick out good private funds from bad ones is elevating market entry barriers for startup private funds without track records and business history. This might undermine positive functions of Korea’s risk capital provision policy for startup private funds since 2015. To address that issue, it is necessary to bolster public institutions’ custodian services, along with prime brokerage services by the private sector.
2050 Carbon Net-zero and Climate Shareholder Activism / Apr. 20, 2021
As ESG management is gaining more ground towards carbon neutrality by 2050, more ESG investing is seeing the rise of climate activism as well as fiduciary activities directly targeting carbon issues. The rise of climate change as one of the shareholder activism strategies could be attributed to the systemic and non-distributable nature of climate change with high externality at a time when carbon regulation became one of the trade barriers affecting investment performance. The gist of carbon neutrality is to designate 167 “systemically important carbon emitters” who are responsible for 80% of global emissions, and to practice shareholder engagement based on Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Korea already pledged to reach carbon neutrality by 2050, which would further facilitate ESG management as well as carbon-related fiduciary activities. What is necessary is a regulatory overhaul for shareholder proposals and disclosures in a way that could leverage the current attention to large emitters to better shape the financial markets towards achieving carbon neutrality by 2050. Towards that end, it is more important now than ever for individual firms to engage more actively in reshaping their governance, carbon policy, and implementation strategies in line with ESG management.
Challenges for Regulatory Improvements on Private Fund Distribution / Oct. 27, 2020
Korea’s private fund distribution has Korea-specific features in investor qualification, investment recommendations, and sales channels. The recent cases of large-scale redemption freezes could have been the result of those features adversely affecting the efforts to help a customer-oriented sales process to take hold. Going forward, a bold policy action is required to break free from the repeated pattern of a crisis of confidence where private fund market inefficiency such as high information asymmetry is transferred to investors. What’s proposed is to scale down the “qualified retail investor” scheme while broadening the scope of the “professional retail investor” scheme. Also, it’s worth considering applying the current investment recommendation regulation to all retail investors regardless of whether they are professional or ordinary investors. With regard to the distribution channel, it is now time to review how large-scale channels and direct channels divide their roles as do other markets. What seems necessary at the current stage is a strategy to establish a direct channel via prime brokers that could provide systematic support to incubation funds for new asset managers, while existing large-scale channels reorganize their product lineup centering on private funds with proven track records in a bid to regain its reputation and confidence as a wealth management service provider.
Promoting Age-Friendly Financial Services in Korea: Future Directions / May. 26, 2020
As older adults aged 50 or over are expected to become the mainstream consumer segment of financial firms amid low fertility and population aging, a new service framework is needed to replace today’s financial services primarily targeting the working age population. Older adults and the working age population have different biological, economic, and behavioral traits. Physical and cognitive aging of financial consumers will call for renewed banking accessibility and preventive measures against financial abuse. Banking accessibility should be enhanced based on a new branch policy that supplements non-face-to-face services, whereas mobile monitoring and effective guardianship should take hold as a deterrent to financial abuse. Furthermore, aging is expected to push up demand for two areas: First, demand for drawdown products that shift household assets to retirement income streams; and second, demand for one-stop services to pass on property rights to descendants. As comprehensive trust services can meet the two lines of demand?asset management and transfer of property assets, this is expected to take hold as an important element to age-friendly banking in the future.

Seminar Presentation