KOR

Research Staff

Research Staff

JANG, GEUNHYUK Senior Research Fellow Macro-Financial Analysis
Research Field

Profile

TEL
82-2-3771-0825
E-mail
geunhyuk@kcmi.re.kr
Education
2004 KAIST Graduate School of Management, Seoul, Korea Ph.D. in Management Engineering
1998 SEOUL NATIONAL UNIVERSITY, Seoul, Korea Doctor course completion in Mathematics
1996 SEOUL NATIONAL UNIVERSITY, Seoul, Korea M.S. in Mathematics
1993 KAIST, Taejon, Korea B.S. in Mathematics
Professional Experience
2017~ Research Fellow, Korea Capital Market Institute
2016~2017 Miraeassetdaewoo, Risk management Dept.
2005~2016 Wooribank, Trading Dept.
2004~2005 Samsung Investment Trust Management, Investment Engineering Dept.

Publications

Opinion

Rising Foreign Exchange Hedging Costs Amid Interest Rate Reversals between Korea and the US and Potential Implications / Jan. 02, 2024
The interest rate reversal between Korea and the US, which has persisted since July 2022, stands out in that its size is the largest (2%) and it is likely to last longer than previous episodes. This rate reversal has altered the FX hedging landscape for Korean economic agents who engage in forward exchange selling. In the past, Korean investors or exporters could hedge against the risk of USD/KRW exchange rate fluctuations (USD/KRW decline) and obtain additional gains through hedging. However, as the rate reversal between Korea and the US has recently come to the fore and the interest rate difference is expanding, FX hedging costs are on the rise.Economic agents in need of FX hedging should be aware of the possibility that hedging costs can be incurred amid the enduring interest rate reversal. And they also need to prepare for the extended period of the rate reversal. Particularly, exporters should brace for the deterioration of profitability potentially arising from the sustained rise in FX hedging costs. In light of these concerns, policy authorities should consider providing FX hedging management support for small and medium-sized exporters. Meanwhile, Korean investors should shift from the habitual routine of pursuing FX hedging in the overseas investment process. It is essential for them to recognize foreign currencies as one of investment portfolios and devise an FX hedging strategy by taking into account FX hedging costs and the financial conditions of individual investors.
Crisis of Credit Suisse: Wipeout of Contingent Convertible (CoCo) Bonds and its Implications / May. 02, 2023
Amid the crisis of the global banking sector triggered by Silicon Valley Bank’s collapse, the bankruptcy risk faced by Credit Suisse (CS), a Global Systemically Important Bank, has come to the fore, causing much tension in the financial market. After having long struggled with risk management failures, lawsuits and penalties, CS has ended up being taken over by UBS under the intervention of the Swiss Financial Market Supervisory Authority (FINMA). During the takeover process, the writedown of contingent convertible (CoCo) bonds set off controversy and market confusion over the seniority between CoCo bonds and common equity. But it is safe to say that the restructuring of CS has been carried out speedily through a bail-in mechanism without any loss inflicted on depositors. In addition, the crisis of CS has shed light on the importance of banks’ risk management. Considering Korean banks’ capital ratio, the possibility that CoCo bonds are written down or banking crises occur seems to be limited. However, as macroeconomic strains could persist, banks should strive to maintain market confidence while paying close attention to risk management and internal control. Notably, in the future, there may be restrictions on capital expansion using CoCo bonds, such as an increase in financing costs, which requires caution in managing the issuance size of CoCo bonds. The supervisory authorities need to revamp the regulatory system for capital requirements and recognize the importance of responding to market unrest in a rapid and orderly manner. Lastly, investors should be aware of an array of risks arising from investing in CoCo bonds, such as a principal writedown.
Implications for the Characteristics of Recent Inflation and the Effect of Diversified Investments in Stocks and Bonds / Jan. 03, 2023
The prices of major assets that have risen since the Covid-19 pandemic have been subject to significant corrections in 2022. A diversified portfolio of stocks and bonds served as an effective investment strategy until 2021. But the effects of such diversification have dissipated as stock and bond prices move in sync due to counter-cyclical inflation. As uncertainty over inflation mounts, the portfolio comprised of stocks and bonds has become susceptible to upside inflation risks.These macro-environmental changes are likely to continue depending on future inflation developments, and have significant implications for asset allocation strategies. Despite a recent analysis that inflation shows early signs of fading, there remains considerable uncertainty as to whether the current economy would return to the pre-Covid 19 era of low inflation and low interest rates. At this juncture, it should be noted that the performance of diversified investment in stocks and bonds may also differ from the previous one. What is also needed is a diversification approach as well as an asset allocation strategy aligned with inflation developments.
Korea’s ELS Market: Current State and Risk Monitoring / Jul. 26, 2022
Amid a decline in key stock indexes, Korea’s ELS market has remained stable in 2022. The outstanding issuance of ELS has been relatively low in size with stock market conditions being more favorable to issuers’ hedging activities compared to the previous market crisis. Still, however, a recent surge in the outstanding balance driven by a sharp drop in ELS early redemption volume, as well as growing uncertainties in the global stock and financial markets, has caused jitters in the ELS market, which requires caution of market participants. Individual issuers should exert further efforts to control risks inherent in ELS issued by them and formulate a plan for stably issuing and managing ELS products by fully considering overall market conditions. ELS investors should maintain a proper weight of ELS in their investment portfolio as part of an asset allocation strategy. What is also needed is risk management by opting for a low knock-in structure that is less likely to generate losses. Furthermore, the financial authorities should closely examine and monitor destabilizing factors in the ELS market.

Seminar Presentation

관련 세미나 이미지
2019 Sep 27
Developing OTC Derivatives for Market Needs: Focusing on KOSPI200 Weekly Options (Korean)
  • Presenter Senior Research Fellow JANG, GEUNHYUK
관련 세미나 이미지
2019 May 28
Economic and Capital Market Outlook for 2H 2019 (Korean)
  • Presenter Senior Research Fellow Kang, Hyunju and others