Business · Markets · 2 hrs ago
South Korean bond yields fell sharply as stocks weakened
South Korean government bond yields fell sharply in October as weakness in the stock market made investors more cautious.
The three-year yield fell 29.6 basis points, while the 10-year yield fell 39.9 basis points.
Some analysts say bond markets overreacted because South Korea may still be in an interest-rate hiking cycle, unlike past stock downturns when rate cuts followed within a year.
They also point out that much of the widening gap between expected stock returns and bond yields came from changes within the stock market.
Others see concern about slower future growth behind the declines in both stocks and bond yields, even though the economy is currently holding up.
Analysts say it is too early to assume bond yields will keep falling, and yields could rise again if stocks stabilize.
Hanwha Investment & Securities expects three-year yields of 3.65% to 3.90% and 10-year yields of 3.95% to 4.20% by year-end.
South Korean government bond yields fell sharply in October as weakness in domestic stocks drove investors toward safer assets.
The three-year yield fell 29.6 basis points, while the 10-year yield dropped 39.9 basis points.
Some analysts said bond yields had fallen too far because markets were still in an interest-rate hiking cycle.
Another view was that falling yields reflected concern about slower future economic growth.
Analysts said it was too early to assume yields would keep falling.
- Who
- South Korean bond markets and analysts at Hanwha Investment & Securities and Hana Securities.
- What
- Government bond yields fell sharply as stocks weakened, prompting debate over whether the decline was excessive.
- When
- In October 2026; the report was published on November 2, 2026.
- Where
- South Korea.
- Why
- Weak stocks prompted risk aversion, while markets also reacted to concerns about slower future growth.
Hanwha Investment & Securities
Hana Securities
Interpretation of falling yields
Hanwha Investment & Securities
Hanwha analyst Kim Seong-su said bonds had overreacted to the stock-market correction, given that the rate-hiking cycle was not over.
Hana Securities
Hana analyst Park Jun-woo said markets were responding to the possibility of slower future growth, as well as the stock-market sell-off.
Outlook
Hanwha Investment & Securities
Kim said yields could rebound when stocks stabilise.
Hana Securities
Park said it was too early to expect a sustained decline in yields and kept his bond investment view neutral.
The KOSPI stood at its recent high of 7,080.92.
South Korean government bond yields recorded their largest monthly falls of the year as domestic stocks weakened.
The KOSPI stood at 5,730.74, and the 10-year government bond yield had fallen 38 basis points since September 23.
Yonhap reported the sharp October yield declines and analysts’ differing interpretations.
- Three-year yield
- Fell 29.6 basis points in October
- Ten-year yield
- Fell 39.9 basis points in October
- KOSPI
- 7,080.92 on September 23; 5,730.74 on October 30
- October-end yields
- Three-year: 3.715%; 10-year: 4.008%
- Hanwha year-end range
- Three-year: 3.65–3.90%; 10-year: 3.95–4.20%
1 source
What people are saying
The decline in the 10-year government bond yield in this episode is seven times the average decline during the previous 10 stock-market correction periods.
My judgment is that bonds have excessively priced in the stock correction, given that monetary policy is currently in a rate-hiking cycle.
If stocks stabilise, a rebound in yields is likely to come first.