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Investors flock to stocks for higher returns

All Headlines 09:18 November 11, 2019

SEOUL, Nov. 11 (Yonhap) -- South Korean investors are shifting their money into stocks out of safer bonds as risk appetite perks up on eased concerns over the U.S.-China trade spat, data showed Monday.

Funds reserved for local stocks registered a net inflow of slightly over 320 billion won (US$276 million) in the one-month period to Thursday, raising their combined assets to 53.8 trillion won, according to the data from financial market tracker FnGuide.

The tally marks a turnaround from stock funds' performance this year. So far this year, those equity funds have recorded a net outflow of 1.03 trillion won.

Market watchers attributed the recent net inflow largely to expectations for progress in the U.S.-China talks to end their tit-for-tat tariff war, which prompted investors to seek riskier assets.

"The global asset market is on risk-on mode on expectations for a phaseout of tariffs by Washington and Beijing," Im Dong-min, an analyst at Kyobo Securities, said.

Investors flock to stocks for higher returns - 1

South Korea's stock market has been on a steady rise in recent months thanks to eased external uncertainties.

The benchmark Korea Composite Stock Price Index has recently breached the 2,100-point level after languishing below the psychologically important 2,000 mark in early August.

In contrast, domestic bonds funds have suffered a net outflow of 915 billion won over the cited period, with their total assets amounting to 32.7 trillion won, according to the data.

Driven by higher risk appetite, South Korean bond yields, which move inversely to prices, have risen sharply in recent months.

The yield on benchmark three-year Treasurys rebounded to 1.518 percent on Friday after tumbling to a record low of 1.093 percent on Aug. 19. Lower yields mean weaker demand for bonds.

Stock-focused funds, meanwhile, have posted an average return of 6.87 percent over the past one-month period, compared with a median return of minus 0.53 percent for bond funds.
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