Bonds Beneficiaries Of Foreign Flows

Figures from the Financial Supervisory Service show that foreign funds purchased a net KRW 1.16tn in South Korea-listed bonds in January, which equates to the biggest inflow since July 2020.

• The fixed income space in South Korea is under some pressure of late after the announcement of plans to give handouts to citizens and SME's affected by the pandemic. Markets are watching for the announcement of another supplementary budget, extra issuance and plans of the MOF or BOK to support the fixed income market.
• The inflows came from funds in Asia, the Middle East and the Americas, while European funds were net sellers. Global funds hold 7.3% of South Korean bonds, amounting to KRW 151.5tn.
• Despite the rally in the KOSPI foreign investors were net sellers of equity markets for the second month, parting with a net KRW 2.7t won of South Korea-listed equities. However, holdings still account for 31.6% of South Korean shares. North America and the Middle East were net sellers of South Korean stocks, funds in Europe and Asia were net buyers.