Seoul-based market tracker FnGuide announced on February 28 that a total of 3.0346 trillion won flowed out of the 140 MMFs available in Korea between February 22 and 26. This is quite contrary to the inflow of money into the MMFs that started earlier this year. Between the beginning of this year and February 19, the MMFs attracted 24.0219 trillion won, a record high since 2009.
Stock market experts are pointing out that some of the outflow is heading toward the stock market as it is showing some signs of recovery these days. According to them, investors’ deposit increased by no less than 1.5736 trillion won in a week to reach 21.644 trillion won on February 25. “The money outflow can be attributable to the temporary demands of institutions investing mainly in MMFs,” said an asset management firm, adding, “However, some of the outflow seems to be going to the stock exchange given that individual investors’ MMF funds showed an outflow as well.”
Since the New Year’s holiday, the Korea Composite Stock Price Index (KOSPI) has jumped from 1,860 points or so to approximately 1,920 points. Likewise, S&P500, Nikkei 225 and Euro Stoxx 50 gained about 6.6%, 8.2% and 4.4% during the same period, respectively.
Still, opinions are split about whether the trend will continue from now on. “Nowadays, the 12-month EPS estimates of those in the MSCI World and Emerging Markets Indices are on a rapid decline,” KDB Daewoo Securities explained, adding, “The recent recovery is likely to be temporary at best with economic indices, business showings and a series of fundamental indicators unlikely to improve for the time being.”