Individual bond buying soars amid flight to safety
Published : Aug 24, 2022 - 09:45
Updated : Aug 24, 2022 - 09:45

South Korean retail investors' bond purchases have surged this year as they seek safe-haven assets amid rising interest rates and a bearish stock market, data showed Wednesday.

Local individual investors had bought a net 10.2 trillion won (US$7.6 billion) worth of bonds over the counter this year as of Monday, according to the data from the Korea Financial Investment Association.

The amount is more than double their net buying of 4.6 trillion won for all of last year.

By type, corporate bonds were the largest at 4.6 trillion won, followed by those issued by non-bank financial institutions with 3.1 trillion won and state bonds with 1.3 trillion won.

It marks the first time the yearly amount of retail investors' net bond buying has surpassed the 10 trillion-won mark since data tracking began in 2006.

The previous record of 6.5 trillion won was set in 2007. Over the past five years, retail investors' net bond purchases have ranged from 3 trillion won to 4 trillion won.

In contrast, retail investors pulled their money from the local equity market, with their net selling reaching slightly over 900 billion won.

In the first 22 days of this month, their net selling of local stocks stood at 421.3 billion won.

Market watchers said retail investors have recently been fleeing from stocks to safe-haven assets amid growing jitters over a global economic recession and greater financial volatility.

Investors' strong bond buying comes amid rising bond yields, with the yield on gilt-edged corporate bonds hovering at about 4 percent, higher than bank deposit rates. (Yonhap)