Investment advisers suffer plunging assets

Investment advisory companies in South Korea are suffering from plunging contracts due largely to institutions' cancellations, leaving more than half in the red, data showed Friday.

According to the data by the Financial Supervisory Service, 159 investment advisory companies' assets under management totaled 16.3 trillion won ($13.9 billion) as of the end of September, down 57.6 percent from end-June last year.

The value was also 8.4 percent lower than three months earlier.

The financial watchdog attributed the decline mainly to increased contract withdrawals by institutional investors keen to bolster their investment management capabilities.

Stung by sinking contracts, 88 investment advisers, or 55.3 percent of the total, have suffered losses in the third quarter of this year.

However, the industry posted a combined net profit of 14.6 billion won in the July-September period thanks mainly to cost-cutting efforts, up 1 billion won from the previous quarter.

Their return on equity, a key barometer of profitability, ticked up to 9.9 percent in the third quarter, bolstered by increased net profits.

An FSS official said the watchdog will keep close tabs on the financial health of local investment advisers. "Despite a slight rise in earnings, their revenue base remains vulnerable due to continually falling contracts. We will closely monitor their financial soundness." (Yonhap)