SEOUL (BLOOMBERG) - South Korea President Moon Jae-in will invest in a local equity fund that bets on companies the government is supporting amid its trade dispute with Japan.
He will invest an unspecified amount in the NH-Amundi Victorious Korea Equity Fund, the presidential office said in a statement Monday (Aug 26).
The fund, started on Aug 14 with about US$24 million (S$33.3 million), invests in Korean suppliers that may benefit from Japan's export curbs on key materials needed for the semiconductor industry.
The president said Korean parts and materials suppliers should develop more so that the economy isn't "affected by external factors", according to the presidential office.
The semiconductor industry accounts for nearly 20 per cent of total exports in South Korea's export-driven economy.
The Moon administration on Aug 7 announced it would spend US$6 billion on research and development for local companies that develop key materials, parts and equipment for the nation's manufacturing industry.
A number of Korean stocks have rallied recently on hopes that they may win more orders from industrial leaders including Samsung Electronics Co and SK Hynix Inc amid Japan's restrictions.
The feud with Japan over colonial-era grievances has snowballed over the past two months and shows no signs of abating.
South Korea last week withdrew from a key intelligence-sharing pact, and its armed forces started training on Sunday near islands that both nations claim.
The benchmark Kospi index is down 10 per cent since the end of June, more than double the decline in the MSCI All-Country World Index.
This isn't the first time a South Korean president has invested in local equities to promote an economic agenda.
Mr Roh Moo-hyun invested 80 million won in several funds targeting Kosdaq index stocks in July 2005 in order to support small and medium-sized firms, according to JoongAng Ilbo.
The tech-heavy gauge surged 85 per cent that year.