According to the Financial Services Commission on Sept. 30, sales on the first day of the second National Growth Fund offering totaled 214 billion won, or 35.7% of the target. The second fund, sized at 600 billion won in total, can be purchased through 10 commercial banks and 14 securities firms until Oct. 15. For the first five business days, 300 billion won, or 50% of total sales, is reserved for lower-income investors, while online sales are capped at 40% for banks and 60% for securities firms.
The National Growth Fund is a five-year closed-end product that invests mainly in companies in advanced strategic industries. Investors receive an income deduction of up to 40% of the amount invested and a separate 9.9% tax rate on dividend income for up to five years.
In the first round, about 87% sold on the opening day and the fund sold out in five days. On Wednesday, however, there were no lines forming before branches opened. An employee at a Hana Bank branch in Seoul's Jongno district said, "In the first round, inquiries came in even before sales began, but this time there were no inquiries even during the week leading up to the launch."
The five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — sold 64.32 billion won worth of the fund, about 24% of their combined 268 billion won quota. When the first fund launched in May, the five banks' entire allocation sold out on the first day.
Demand for the general-type product, by contrast, remained solid. General-type products sold through the online channels of Mirae Asset Securities and Korea Investment & Securities were snapped up in one minute and seven minutes, respectively. Major brokerages including Shinhan Securities and Kiwoom Securities also sold out their online general-type allocations.
The financial investment industry attributes the slower initial pace to restrictions barring first-round subscribers from joining the second fund, along with the increase in the share reserved for lower-income investors to 50% from 20%. Only 70.88 billion won of the 300 billion won reserved for lower-income investors was sold.
Returns on the first fund of less than 1% also made investors more cautious, analysts said. An FSC official said, "Sales will rise sharply from the sixth business day, when priority sales for lower-income investors end," adding, "With the Kosdaq market having stabilized recently, we expect many investors interested in long-term investing to sign up."
FSC Vice Chairman Kwon Dae-young visited NH NongHyup Bank's branch at the Government Complex Seoul on Wednesday and subscribed to the fund himself. "It will be a meaningful investment opportunity for the public to share in the fruits of growth in future strategic industries, and a foundation for mutual growth that supplies advanced strategic industry companies with the capital they need," Kwon said.
