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Mirae Asset Group’s alternative investments pose higher risks

[THE INVESTOR] Mirae Asset Group is rapidly expanding its portfolio of alternative investments, amid concerns the company could be exposing itself to greater risks.

According to the Korea Financial Investment Association, Mirae Asset Group currently holds more than 8.82 trillion won (US$8.02 billion) in alternative investments. The figure is more than 6 trillion won higher than that recorded at the end of 2007. 

The KFIA’s definition of alternative investments includes real estate, social overhead capital and other investments that are not securities or similar investment vehicles that are defined as conventional investment assets.

Of the total, real estate accounted for the largest part, with more than 5.86 trillion won invested in local and overseas real estate.

The group has recently begun expanding its portfolio in hotels and resorts. On Aug. 9, the consortium led by Mirae Asset Group was selected as the preferred bidder for a 1 trillion won resort project in Yeosu, South Jeolla Province. Following the announcement, Mirae Asset Group chairman Park Hyun-joo told local media he plans to increase investment in leisure facilities to 2 trillion won. The company’s investments in overseas hotels is set to exceed 2 trillion won within the month. 

While the group says alternative investments such as hotels and resorts offer higher yield, others are raising concerns the group could be exposing itself to higher risks.

In a recent report, the Bank of Korea warned that changes in the economic landscape could deal severe damages to alternative investments, as they are higher risk and less liquid than traditional assets.

By Choi He-suk (