Shifting Tide

 

Due to the low interest rate of 1 percent, capital is being concentrated into overseas stock-type funds and domestic bond funds. 

According to financial information services provider FnGuide, a total of 1.3039 trillion won (US$1.19 billion) has been flooded into overseas stock-type funds since the beginning of the year. 

In particular, as 1 trillion won (US$914.24 million) has come in the last month and 330 billion won (US$301.7 million) in the past week, overseas stock funds are reaching their height. 

The high popularity of the overseas stock funds is largely due to high earnings rates. Its average rate of return reached 6.66 percent in the past month, surpassing the figures of the benchmark rate, domestic stock funds of 1.63 percent, and domestic bond funds of 0.64 percent during the same period. 

In particular, more than 800 billion won (US$731.4 million) has been concentrated into funds in mainland China worth 350 billion won (US$319.99 million) and funds in Europe worth 495 billion won (US$452.55 million) in a month, leading to the upward trend of overseas stock funds. 

Unlike overseas stock funds, there are continuous outflows from domestic stock funds.  

There has been a net outflow of money in the past 5 days and a capital outflow of 2.7943 trillion won (US$2.55 billion) in the past month. However, the trend will somewhat be settled if the KOSPI gets out of the box pattern of 1800 to 2100.  

With a lot of investors also coming in to domestic bond funds, its net assets have exceeded 70 trillion won (US$64 billion) in 10 years.

According to the “Trend Analysis of the Domestic Fund Market in March” released by the Korea Financial Investment Association, a total amount of its funds recorded 409.8 trillion won (US$374.65 billion) as of the end of last month. The figure increased by 2 trillion won (US$1.83 billion), or 0.5 percent, from the end of February. The net assets during the same period increased by 4.3 trillion won (US$3.93 billion), or 1 percent, to 410.5 trillion won (US$375.3 billion).

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