Shinhan Investment Securities has proposed allocating 2% of investment portfolios to digital assets as the traditional 60% stock and 40% bond strategy struggles to provide the diversification investors once expected.
Summary
- Shinhan Investment Securities has proposed allocating 2% of investment portfolios to digital assets and 8% to alternative assets.
- The recommendation followed an analysis that found an 8 to 2 split between gold and Bitcoin produced relatively favorable risk adjusted results.
- Senior researcher Park Woo yeol said stocks and bonds have increasingly moved together, reducing the defensive benefit expected from a traditional 60/40 portfolio.
- Park said competition between traditional finance and crypto platforms is increasing as digital asset exchanges expand into stocks and ETFs.
According to Yonhap News Agency, Shinhan Investment Securities senior researcher Park Woo-yeol outlined the allocation during a press briefing at the Korea Exchange in Yeouido, Seoul, on Sept. 8, arguing that stocks and bonds have increasingly moved in the same direction.
The conventional 60/40 portfolio relies partly on bonds cushioning losses when equities decline. Park said that relationship has become less reliable, prompting the securities firm to look at assets with lower correlations to both markets.
Shinhan is now proposing that investors allocate 8% of their portfolios to alternative assets and another 2% to digital assets.
Shinhan proposes 2% digital asset allocation
The securities firm began recommending a 2% digital asset weighting this year after examining the risk-adjusted performance of portfolios that divided a 10% alternative allocation between gold and Bitcoin.
According to Park, the analysis produced relatively favorable results when gold and Bitcoin were divided at an 8-to-2 ratio. Under that model, Bitcoin would account for 2% of the overall portfolio.
The recommendation comes as South Korea works on rules that could give digital assets a larger role within its regulated financial system.
In July, crypto.news previously reported that the government had renewed plans for crypto ETFs, alongside legislation covering stablecoins, tokenized government bonds and other blockchain initiatives. Authorities are preparing the Digital Asset Basic Act and a framework for cross-border stablecoin transactions.
South Korea has been gradually opening other parts of its financial system to digital assets as well. The Ministry of Economy and Finance disclosed plans in July to include digital assets under a new state asset management framework that would replace rules centered largely on conventional property.
Institutional participation has historically faced tighter restrictions. Financial institutions were barred from directly investing in cryptocurrencies under a policy dating back to 2017, while regulators have spent the past several years working through how crypto products can fit within existing securities and investment rules.
Trading hours are changing competition for Korean investors
Park said changes in global ETF trading could create another challenge for South Korea’s securities market.
Nasdaq is working toward extended trading that would eventually keep its market open for 23 hours on weekdays. Such a schedule would allow Asian investors to trade U.S. stocks and ETFs during South Korea’s regular market hours instead of waiting for the U.S. session.
Nasdaq’s plans have already moved through several regulatory and infrastructure steps. In August, the exchange agreed to acquire LeveL Markets, an alternative trading system that reaches more than 2,500 clients and trades more than 7,000 symbols daily.
The deal formed part of Nasdaq’s work around longer trading hours, tokenized securities and digital market infrastructure. The U.S. Securities and Exchange Commission approved Nasdaq rules for tokenized securities in March before approving longer trading hours in April.
Park expects the changes to intensify competition for investors once U.S. stocks and ETFs become accessible during Korean market hours.
At the same time, crypto trading platforms have been moving into products traditionally associated with securities markets.
“Stocks, bonds, commodities and ETFs that were traded through securities accounts can now be traded on crypto exchanges,” Park said. “Competition between traditional finance and digital finance platforms has begun.”
Crypto platforms have an additional difference in their operating hours because digital asset markets continue through weekends. Park pointed to the ability to react to geopolitical developments and other events that occur while conventional securities markets are closed.
Crypto exchanges are moving into stock trading
The boundary between the two types of trading platforms has already become less distinct as exchanges roll out tokenized stocks and equity-linked products.
Binance, for example, launched tokenized U.S. stocks in June through bStocks, allowing eligible users to convert supported equities into blockchain-based assets that can trade around the clock. Its initial group included tokenized versions of Nvidia, Tesla, Circle, Micron and Sandisk.
The products are backed 1:1 by underlying securities, according to Binance, and can be transferred to supported self-custody wallets or used in decentralized finance applications.
Kraken has taken a similar approach with xStocks. In July, the exchange began letting eligible users use tokenized stocks and ETFs as collateral for futures and margin positions on Kraken Pro, allowing traders to keep equity exposure while using the assets to support leveraged trades.
The model has continued expanding across international markets. Kraken parent Payward said in July that its xStocks platform had surpassed 500 tokenized assets and $37 billion in transaction volume, with plans to expand beyond U.S. securities into Hong Kong, the U.K., Europe and South Korea, subject to regulatory approvals.
South Korea is separately preparing its domestic capital markets for blockchain-based securities. Hanwha Investment & Securities has reportedly completed a tokenized securities platform supporting Avalanche and Hyperledger Besu ahead of legal changes scheduled for February 2027.
The Financial Services Commission plans to initially permit tokenization of certain funds, bonds, unlisted shares and fractional securities under the new framework.
Single-stock leveraged ETF trading has fallen sharply
While trading platforms are adding new products, Park said one source of recent market volatility has lost much of its influence.
Daily trading volume in single-stock leveraged ETFs averaged roughly 15 trillion won during June and July, according to the researcher. Recent turnover has fallen to between one-tenth and one-twentieth of those levels.
Park said the decline makes a return to the same level of volatility less likely for the time being.
He did not interpret the lower trading volume as evidence that existing investors had exited the market. Individual investors accounted for much of the net buying in those products, and Park said they appeared to be holding positions while waiting for prices to rebound instead of actively trading during the lower-volatility period.
For September, Park named the U.S. Dow Jones dividend index as his preferred ETF index.
Unlike South Korean dividend stocks, U.S. dividend stocks carry relatively high weightings in energy, healthcare and consumer staples, he said. Park argued that composition could offer an advantage in an environment of elevated geopolitical risk and market volatility.
