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The ‘first Korean version of the New Deal strategy meeting’ was held on the 3rd at the Blue House Guest House, chaired by President Moon Jae-in. The event was attended by important financial figures such as Yong-byeong Cho, President of Shinhan Financial Group, Jong-gyu Yoon, President of KB Financial Group, Dong-geul Lee, President of Industrial Bank, Sang-Gyu Sang-Gyu, President of Export- Import Bank, Hyun-joo Park, Chairman of Mirae Asset Financial Group, and Seok-Hoon Jang, CEO of Samsung Securities. Participants receive a remote video report on how to participate in the Korean version of the financial sector of the New Deal Fund. Reporter Huh Moon-chan [email protected]
On the 3rd, the Blue House brought together the presidents of the top 10 financial groups at the ‘First Korean Version New Deal Strategy Meeting’ to announce the creation of the New Deal Fund. President Moon Jae-in expressed his gratitude for the role of finance in the crisis of the new coronavirus infection (Corona 19) and requested that he continue to actively support it. The CEOs of finance companies, who have been dubbed the Blue House, announced plans to invest in the New Deal business one after another. If it is a high yield investment, I would be willing to invest, but there was a voice to which it responded reluctantly for the mobilization of the government. It is also noted that it is not clear if it will lead to a real investment because the investment objective is a “disaster” of a business already in progress, or there is a lot of cloud-catching content without specific plans.
○ Financial group “I made an investment plan, but …”
President Moon emphasized in the Korean version of the New Deal strategy meeting held at the Blue House that “active financial support is necessary for the success of the Korean version of the New Deal.” Financial holding companies responded to the situation by accepting this as investment pressure. Shinhan Financial Group announced ‘Project NEO’ with the content of investing a total of 85 trillion won in new growth industries to support New Deal policy. KB Finance has come up with a plan to invest 9 trillion won, and Woori Finance and Hana Finance also invest 10 trillion won each. Nonghyup Finance also announced a support plan worth 1.3 trillion won on New Deal.
However, it is noted that the actual effect will not be great. The amount of investments and loans for the New Deal policy announced by each finance company is that they are investing funds in digital businesses that are already being promoted, or there are many examples of adding investment plans to existing infrastructure funds. Details such as whether the actual fund can be created and how much to invest may vary depending on the circumstances of the business.
The major finance companies have already invested tens of billions to hundreds of billions of billions of billions in each of the Lee Myung-bak administration’s “Green Funds” and the “Unification Fund” from the Park Geun-hye administration. These are watchdog funds that are being evaluated as neglected by investors due to low returns. Even in Moon Jae-in’s administration, he has pledged to invest hundreds of billions of billions in corporate structure innovation, fintech innovation, equity development, and bond market stabilization funds. An official of a holding company said: “It is a board that needs to readjust the fund launch plan and the investment size for each affiliate”, and said: “Since the objective of the policy is the priority in investment , it is questionable whether it can be properly invested in consideration of commercial viability. “
○ Preservation of income with taxes
The government issued various incentives to revitalize the New Deal Fund on this day. It is content that reinforces the capital guarantee and provides tax benefits. First, the policy-type New Deal Fund reduced private investment risk by placing 7 trillion won in policy funds as a subordinate. If there is a loss, the policy funds are taken first and the principal is practically guaranteed. However, it is noted that the policy fund is ultimately a tax, so the blood tax is used to offset the loss. “If the private company suffers a loss,” said Sim Sang-jeong, executive director of the Justice Party, “I will guarantee the capital and investors’ profits with the people’s tax,” he said.
Infrastructure funds that invest more than a certain percentage of infrastructure in the New Deal sector also provide tax benefits. This is also inducing the revitalization of funds through public finances. There is concern that the Korean Stock Exchange’s decision to create indices such as the ‘K New Deal Index’ and the ‘Carbon Efficiency Green New Deal Index’ and to introduce an exchange-traded index fund (ETF) using the indices will not have a great commercial value.
Reporter Kang Young-yeon / Kim Dae-hoon [email protected]
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