KIC mulling additional investment in BoA-Merrill Lynch

SEOUL, Sept. 23 (Yonhap) -- South Korea's sovereign wealth fund Korea Investment Corp. (KIC) will decide next week over whether to make an additional investment in BoA-Merrill Lynch, its head said Friday.
In 2008, KIC invested US$2 billion in Merrill Lynch, but it suffered heavy valuation losses worth around $1.5 billion from its investment, hit by the global financial crisis. Merrill Lynch was later purchased by Bank of America Corp. (BoA).
"Shares of BoA-Merrill Lynch seemed to hit a bottom although it may take time for further gains," Choi Chong-suk, chief executive at KIC, was quoted by as saying in a meeting with reporters in Washington.
Even as KIC suffered heavy losses, the sovereign wealth fund re-invested $78 million with part of the dividend income from its original investment this year. It earlier said that it plans to closely watch the global economy and financial markets for potential investment.
Choi said the fund plans to hold a meeting on Wednesday to decide whether to make an additional investment in BoA.
Market watchers said that as the global financial markets have been rocked by the first-ever U.S. credit downgrade and the eurozone debt fears, KIC's potential investment is feared to incur further losses if BoA share prices suffer a setback.
Touching on a credit rating downgrade on BoA by Moody's Investors Service, Choi said there seemed to be no credit problems fundamentally.
Choi, meanwhile, said that KIC plans to invest around $200 million in Chinese currency denominated assets as there is a high chance that the value of the yuan will be on the rise.
"There is a high possibility that the value of the Hong Kong dollar or yuan would appreciate. KIC plans to kickstart investment in yuan assets down the road," Choi noted.
KIC was established in July 2005 to manage part of South Korea's foreign reserves entrusted by the government and the Bank of Korea. It had more than $35 billion in assets under management as of the end of December.
sooyeon@yna.co.kr
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