Korean financial experts recommend investors focus more on risk management this year as tightening monetary policy around the world is expected to pick up speed with the U.S. Federal Reserve signaling a rate hike earlier this year, making exchange-traded funds (ETF) most attractive asset to hold.

According to a poll of 100 financial leaders conducted by Maeil Business Newspaper on Monday, most of the respondents recommended diversified investment with a conservative perspective this year. Many agreed that the opportunity for high returns would come in the second half of the year than in the first half, where there are great uncertainties and risks such as rate hikes by Fed, growing inflationary pressure worldwide, China`s policy response, and the Korean presidential election.

Especially, investors are advised to cut down stock exposure and increase cash holdings in January and February as Korea’s benchmark Kospi stock index is expected to remain sluggish in the coming months, said Lee Kyung-min, a researcher at Daishin Securities, forecasting that the Kospi will move between 2,610 and 3,330 points this year.

In the survey, 36 percent said ETFs will be the most popular in the market, followed by cash savings and deposits with 23 percent of votes, stock investment deposits and CMAs (17 percent), and cryptocurrency and other alternatives (11 percent). In particular, financial leaders emphasized `preemptive debt management` as the core principle for households this year.

Others said that stocks in advanced economies remain attractive and some 10 percent of assets should go to alternatives such as cryptocurrencies. Bonds and gold were the least recommended.

Many said investment in real estate was relatively less attractive in an environment where interest rates are set to rise and tax burdens increase. The country’s property market also needs to take a breather after shooting up too high in a short period, while uncertainty on real estate policy increases before presidential and local elections in the first half.

Banking leaders expect that the country’s household loan growth rate will be controlled at 4 to 5 percent this year, lower than last year, predicting that the flow of funds in the real estate market may shrink. Many agreed that the central bank’s base rate will be raised two or three times through the year, reaching 1.5 to 1.75 percent at the end of the year. The average exchange rate was forecast to remain below 1,200 won, somewhere between 1,130-1,190 won, as last year.

By Shin Chan-ok, Cha Chang-hee and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]