Translation to English

“The later stages of a bubble in asset prices…We can still make a profit”

Injy Jeong for Money Today
January 18, 2021

"We could be in the later stages of a bubble in asset prices for all assets. Even though that is the case, you can still generate high returns, so investors should continue investing. Even in a bearish market if you manage risks well, you will not have to worry.”

These were the words of Ohad Topor, CEO of TCK, in a written interview with Money Today on the 17th. TCK advises HNWIs on allocation of investments and strategies both in the UK and Korea.

TCK clients typically have assets worth more than USD5million. In 2013, the company signed an MOU (memorandum of understanding) with Samsung Life Insurance and created an elaborative network of business partners that includes asset managers and ultra-rich groups.

When asked about KOSPI hitting highs late last year he said “KOSPI is a cyclical market, it is normal to gain faster than global equities in the upside phase of the cycle.”

This year, emerging markets and Asian markets including Korea are expected to perform well as the global economy recovers. However, Ohad emphasized that “markets can go down much sharper if negative sentiment returns.”

He also recommended to diversify investments and said “even if you believe in KOSPI, don’t invest too much in one country, you should diversify globally. Kospi doesn’t always outperform. In the last ten years global equities was +140% vs Kospi +70% in USD,” he said.

“Korean investors are very interested in stocks, but risk can be high if investment is concentrated on a few stocks. Investors need a strategy to diversify investments globally.”

“The outlook is positive for risky assets in 2021, especially in equities. Growth rates are expected to recover as we begin to receive vaccines.”

85% of the global population is expected to be vaccinated by the end of the year. “If vaccines are successful, expect strong pent-up demand to fill the output gap,” said Ohad.

“If vaccines work, we can look for potential catch up by laggards such as banks, commercial REITs, oil & gas, travel & leisure, UK equities, Latin American equities, etc.”

“If equities does well, by extension other cyclical asset classes may do well, the KRW appreciation is seen continuing in a risk-on,” said Ohad.

In the case of the global stock market, China looks promising in the short-term, but the influence of the US market will still remain. “The amount of foreign investment in China is only 5%, and its domestic stock market has a lot of room for growth,” said Ohad.

He went on to say, “the advantage of the US market is the amount of high-tech companies there, and the strong focus on profitability that prioritizes shareholders.”

However, he warned to “watch out for retail exuberance and over-pricings (e.g. Tesla is now bigger than the top 7 car manufacturers, globally).”

This is because “price is what you pay, value is what you get.”

Ohad emphasized that “HNWI investors generally have a good understanding of the need to invest their excess cash. Inflation erodes the value of cash over time, if you don’t invest, your wealth will disappear.”

“Two themes that will drive huge amounts of investments in the 2020s decade: digital revolution and transition to greener economy. To this, there will always be opportunities when investing in the stock market.”