Abu Dhabi, UAEFriday 22 November 2019

South Koreans continue to invest in Japanese REITs despite boycott

South Korea is embroiled in a bitter row with Japan stemming from Tokyo's use of forced labour during Second World War

South Koreans are boycotting buying everything from beer to cars to clothing from Japan.  Bloomberg
South Koreans are boycotting buying everything from beer to cars to clothing from Japan.  Bloomberg

South Korea’s boycott of Japan stops at financial products generating high returns.

While many Koreans have ceased buying everything from beer to cars to clothing from Japan and canceled trips there amid a trade spat, they have flocked into the nation’s real estate investment trusts.

Korean investors’ holdings of Japanese REIT funds have quintupled from the start of the year to about 291 billion won ($248 million), according to data from investment information provider KG Zeroin. They’ve bought a net 60 billion won in October, set for the biggest monthly inflow this year.

The hunt for better investment returns is fueling enthusiasm for the Japanese property market. The Tokyo Stock Exchange REIT index has gained 27 per cent this year, at a time when a sharp slowdown in Korean economic growth and trade conflicts have weighed on the country’s shares.

“J-REIT funds have had a steady, solid performance and that’s attracting investors struggling to find an attractive place to park their money amid global volatility,” said Yongsik Park, a fund manager at Samsung Asset Management, the country’s biggest money manager with 256 trillion won of assets.

Japanese REITs have been surging as the Bank of Japan’s ultra-easy policy supports the property market, and on expectations of increased foreign demand for the trusts after FTSE Russell announced that it will add them to its global equity index. Read more about J-REIT’s rally

Korean investors’ net purchases of Japanese REIT funds totaled 232 billion won this year as of October 21, compared with net sales of 13 billion won last year and purchases of 15 billion won in 2017, according to Zeroin data.

Samsung Asset said its J-REIT funds have grown almost 10-fold this year, with 120 billion won of assets under management.

Updated: October 28, 2019 03:51 AM

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