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Domestic Investors Flocking to MMFs for Safe Investment
Safe Investment
Domestic Investors Flocking to MMFs for Safe Investment
  • By Jung Suk-yee
  • February 11, 2016, 03:15
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The large size of the money inflow into MMFs is likely to be because of an increasing preference for safe assets with deflationary concerns.
The large size of the money inflow into MMFs is likely to be because of an increasing preference for safe assets with deflationary concerns.

 

It has been found that a total of 21.105 trillion won has flowed into MMFs in Korea during the first 23 trading days of this year with global funds flocking to risk-free assets.

The Korea Financial Investment Association announced on February 10 that the amount reached 16.8113 trillion won in the previous month alone and the amount until February 3 hit a new high since 2009, when the fund inflow into domestic MMFs had amounted to 27.0691 trillion won during the same period. Under the circumstances, the net assets of the MMFs added up to 115.349 trillion won, breaking the 115 trillion won mark for the first time since September last year.

In fact, money inflow into MMFs in the first couple of months has repeated itself for years. This year, however, the tendency is particularly continuous and the size of the inflow is especially large. This seems to be because of an increasing preference for safe assets with deflationary concerns on the rise due to the slowdown of the Chinese economy, drops in oil prices, etc. In addition, the trend is likely to continue for a while as global economic uncertainties are mounting in the form of the recent plunge of the Japanese stock market.

“The fund inflow into MMFs in Korea is particularly conspicuous now due to adverse economic conditions,” an asset management company explained, adding, “The geopolitical risks surrounding the Korean Peninsula are likely to compound the matter for the time being.”