Keeping Aloof Investment
According to the Bank of Korea, South Korea’s M1 and M2 as of the end of September this year totaled 75.24 billion won (US$67.33 million) and 2.3841 quadrillion won (US$2.1337 trillion), respectively.
That month, demand deposits increased by 3.8 trillion won (US$3.4 billion) from a month earlier to 197.3333 trillion won (US$176.6133 billion), money market savings deposits increased by 5.3 trillion won (US$4.74 billion) to 471.519 trillion won (US$422.0 billion) and time deposits and installment savings with a maturity of less than two years increased by 2.9 trillion won (US$2.59 billion) to 924.0671 trillion won (US$827.04 billion), each of which is a new high since 2010.
M2 increased by 8.3% between January and February and by 7.8% between February and March this year. However, the rate of increase is going up these days due to the factors including Brexit, housing market regulations and the election of Donald Trump as the U.S. President.
“This type of money remaining in financial institutions is showing a continuous increase and not flowing toward capital markets in spite of the government’s efforts such as the release of individual savings accounts,” a local bank explained, adding, “It seems that investors and financial consumers are shunning long-term investment with political and economic uncertainties mounting and interest rates predicted to rise.”