KIC discusses post-US tariff infrastructure strategy with pension funds

The Korea Investment Corporation (KIC) on Tuesday discussed infrastructure investment opportunities and risks in the wake of the US government’s tariff hikes at its regular strategy discussion meeting with domestic pension and savings funds.

In a presentation during the session, senior executives of Macquarie Asset Management warned that sharp tariff increases under the Trump administration would undermine economic growth not only in major economies but also in the US, according to the KIC.

However, they said that infrastructure is likely to outperform other sectors amid the heightened market volatility, with energy-related assets in particular expected to remain resilient to US protectionist policies.

“We expect infrastructure could perform relatively well in the stagflationary environment we may now be in,” KIC quoted Ben Way, head of Macquarie Asset Management, as saying. “Infrastructure is generally considered a defensive asset class, which can act as an inflation hedge and may generate high yields.”

Leigh Harrison, global head of Macquarie’s infrastructure and real assets, forecast that the US tariffs could rise to as high as 20% this year, based on the weighted average applied tariff rate.

Edward Northam, head of Macquarie’s renewables investments, noted that renewable energy infrastructure and assets linked to the US energy transition are attractive, citing rising electricity demand and the growing price competitiveness of renewable energy.

The Australian investment firm has managed A$18.5 billion in assets in South Korea since it entered the country in 2001. Globally, it manages A$942.7 billion across infrastructure, real estate, private equity and other assets as of the end of September last year.

KIC has hosted these regular strategy discussion meetings with overseas investment managers from 26 Korean institutional investors since launching them in 2014. Tuesday’s session marked the 50th gathering.

Write to Gyeong-Jin Min at min@hankyung.com
 

Yeonhee Kim edited this article.