Kim Hyun-seop, head of KB Kookmin Bank's Gold & Wise The First Dogok Center, advised on the 9th that maintaining portfolio balance is more critical than selecting individual stocks during the current market rally. In an interview with Yonhap Infomax, Kim recommended holding approximately 30% of assets in cash to preserve strategic flexibility as client interest shifts from deposits to equities. The guidance comes as Korean stocks experience sustained gains, prompting bank clients to reallocate funds from real estate and fixed deposits into equity-linked products, with late entrants showing heightened sensitivity to market volatility.
KB Bank PB Head Recommends 30% Cash Position Amid Stock Rally
Kim Hyun-seop, who has 30 years of banking experience including 20 years in private banking, stated that maintaining portfolio ratios takes precedence over asset selection in the current market environment. "In a market like this, maintaining portfolio ratios is more important than picking good assets," Kim said. "Holding about 30% in cash assets provides both psychological and strategic flexibility." He emphasized that the core principles of asset management involve diversification across asset classes and investment timing rather than timing individual securities.
Kim outlined a standard portfolio structure that includes fixed deposits and other cash-equivalent assets alongside bonds, dollar-denominated assets, and gold. The specific allocation varies based on client risk tolerance, investment horizon, and existing holdings, but the fundamental principle remains avoiding excessive concentration in any single asset class.
![Kim Hyun-seop, head of KB Kookmin Bank's Gold & Wise The First Dogok Center]()
Kim Hyun-seop, head of KB Kookmin Bank's Gold & Wise The First Dogok Center. Photo: Yoon Seul-gi
Client Funds Shift from Deposits to Korean Stocks
Kim confirmed that client interest has definitively moved toward the stock market in recent months. "Bank clients typically focus heavily on taxation, tax exemptions, and stability, but recently interest in the stock market has clearly increased," he said. "Some clients who sold real estate are now looking to allocate portions into financial assets, particularly equity products."
Clients who previously avoided equity investments have begun showing interest following sustained index gains and related news coverage, according to Kim. He noted a behavioral divide between early and late entrants: clients who invested starting last year maintain composure during minor corrections, while those who entered near recent highs experience frustration even with modest index pullbacks.
Semiconductor Sector Outlook Positive with Caution on Volatility
Kim assessed the long-term direction of Korean stocks as positive, particularly for the semiconductor sector. He cited big tech data center investments, long-term supply contracts, and memory price increases as factors supporting continued sector improvement into next year. However, he cautioned that the magnitude of recent gains increases the likelihood of near-term volatility.
"In the first half, I explained to clients variables like interest rate burdens and large-scale IPOs that could trigger market movements, and recommended partial profit-taking," Kim said. "Even in June, I suggested converting 10-20% of heavily appreciated semiconductor holdings to cash, because variables like interest rates and large IPOs can become market triggers and must always be monitored."
Kim advised against concentrating exclusively in semiconductors despite the sector's leadership role. "While semiconductors will be the main focus, I'm also discussing nuclear power, defense, shipbuilding, and cosmetics sectors with clients," he said. "Rather than holding only leading stocks, I try to include sectors with solid fundamentals that haven't yet gained market attention."
![Kim Hyun-seop, head of KB Kookmin Bank's Gold & Wise The First Dogok Center]()
Kim Hyun-seop, head of KB Kookmin Bank's Gold & Wise The First Dogok Center. Photo: Yoon Seul-gi
Kim characterized the current market as psychologically challenging for most participants. The rapid price appreciation has created relative deprivation among both non-participants and those with modest equity positions. "Right now, except for a minority who invested with high leverage, most investors feel a sense of emptiness," he said. "In such times, maintaining portfolio ratios is more important than chasing trends without principles."
He reiterated that asset management fundamentally centers on determining sustainable allocation levels for clients and consistently managing those positions rather than predicting individual securities. "While some trading within equity allocations is possible, the overarching principle is maintaining portfolio ratios," Kim said. "Markets continuously change, but the principle of managing portfolio ratios does not."
FAQ
What did Kim Hyun-seop recommend regarding cash holdings during the current stock rally?
Kim Hyun-seop recommended holding approximately 30% of assets in cash-equivalent positions such as fixed deposits. He stated this level provides both psychological comfort and strategic flexibility, allowing investors to reduce exposure to appreciated assets and maintain capacity to purchase undervalued securities.
Why are Korean bank clients shifting funds from deposits to stocks?
Kim confirmed that sustained index gains and related news coverage have driven increased client interest in equity markets. Some clients who sold real estate properties are allocating portions of proceeds into equity-linked financial products, representing a shift from traditional preferences for stable, tax-advantaged deposit products.
What sectors did Kim suggest alongside semiconductors for portfolio diversification?
Kim recommended diversifying beyond semiconductors into nuclear power, defense, shipbuilding, and cosmetics sectors. He advised holding a mix of market-leading stocks and fundamentally sound sectors that have not yet gained significant market attention, rather than concentrating exclusively in the dominant semiconductor sector.
