Business · Markets · 1 hr ago
South Korea’s September bond trading rose as individuals bought and foreigners sold
South Korea’s over-the-counter bond trading rose in September compared with August, reaching 448.7 trillion won.
The increase followed weaker trading in August, when concern about a possible rate rise had dampened activity, and trading remained below the level a year earlier.
Short-term government bond yields rose, while yields on 20- and 30-year bonds edged down.
Individuals bought 4.02 trillion won more in bonds than they sold, apparently seeking interest income as rates rose.
Foreign investors sold a net 1.16 trillion won, mainly in short-term bonds, as incentives for currency-related arbitrage weakened early in the month.
Their holdings of South Korean bonds fell by 7.8 trillion won to 336.9 trillion won by the end of September.
The data give a picture of trading and investor holdings for September; no further developments are specified.
South Korea’s over-the-counter bond trading reached 448.7 trillion won in September, up 60.3 trillion won from August but down 68.2 trillion won from a year earlier.
Individual investors bought a net 4.0225 trillion won in bonds, while foreign investors sold a net 1.158 trillion won.
The Korea Financial Investment Association said trading rose partly because activity had fallen in August amid concerns about a benchmark rate increase.
Government bond yields rose most at the short end, while yields on 20-year and 30-year bonds edged down.
The association said weaker incentives for foreign arbitrage trading early in the month contributed to foreign selling, while individual buying was likely driven partly by demand for interest income.
- Who
- Individual investors bought bonds, while foreign investors sold them.
- What
- September over-the-counter bond trading rose from August, and government bond yields rose mainly on short-term bonds.
- When
- September; the Korea Financial Investment Association reported the figures on October 12.
- Where
- South Korea’s over-the-counter bond market.
- Why
- Trading increased partly because activity had fallen in August. The association linked foreign selling to weaker arbitrage incentives and said individuals were likely seeking interest income from higher rates.
Individual bond investors
Foreign bond investors
Trading activity
Individual bond investors
Individuals bought a net 4.0225 trillion won in bonds in September.
Foreign bond investors
Foreign investors sold a net 1.158 trillion won in bonds.
Stated motivation or market conditions
Individual bond investors
Their buying was likely partly driven by demand for interest income as rates rose.
Foreign bond investors
Weaker incentives for arbitrage trading early in the month contributed to selling, especially in short-term bonds.
No direct quotes in the coverage so far.
Government bond yields rose sharply amid heightened Middle East tensions, a surge in international oil prices and rising global long-term yields.
As oil prices and the won-dollar exchange rate stabilized, yields on very long-term government bonds fell; foreign investors also bought 10-year government bond futures and medium- to long-term bonds.
The 1-year government bond yield stood at 3.733%, while the 20-year yield was 4.420%.
The Korea Financial Investment Association reported September bond-market trading and investor flows.
- Over-the-counter bond trading
- 448.7 trillion won in September
- Change from August
- Up 60.3 trillion won
- Individual net purchases
- 4.0225 trillion won
- Foreign net sales
- 1.158 trillion won
- Foreign bond holdings
- 336.9 trillion won at the end of September
- 1-year government bond yield
- 3.733% at the end of September
Sources
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