Boosted by Equity Fund and MMF: Fund Net Assets Increase 12 Trillion Won in Oct. | BusinessKorea

Monday, January 22, 2018

Boosted by Equity Fund and MMF

Fund Net Assets Increase 12 Trillion Won in Oct.

The net assets in the Korean fund market increased about 12 trillion won (US$10.76 billion) in Oct.
The net assets in the Korean fund market increased about 12 trillion won (US$10.76 billion) in Oct.
Seoul, Korea
9 November 2017 - 11:30am
Yoon Yung Sil

As the Korea Composite Stock Price Index (KOSPI) broke the 2,500-point level, propelled by a rise of large-cap stocks and strong foreign buying, the net assets in the fund market, mainly domestic equity funds and money market funds (MMFs), increased about 12 trillion won (US$10.76 billion) last month.

According to data by the Korea Financial Investment Association on November 8, the total value of funds came to 510.8 trillion won (US$457.95 billion) as of the end of last month, up 9.4 trillion won (US$8.43 billion), or 1.9 percent, in a month.

Its net assets grew 11.9 trillion won (US$10.67 billion), or 2.3 percent, to 520.1 trillion won (US$466.29 billion). This was largely due to a net inflow of 11.6 trillion won (US$10.4 billion) for a month after corporate MMFs, which outflowed because of demand for quarterly funds, returned.

Domestic equity funds showed a net outflow of 800 billion won (US$718.46 million) for a month but its net assets increased 2 trillion won (US$1.8 billion) to 57.4 trillion won (US$51.55 billion) as stock prices skyrocketed.

Foreign equity funds also had a capital inflow of 500 billion won (US$449.03 million) as the world’s major stock markets showed an upward trend and the tax exemptions on foreign equity funds will end at the end of the year. The net assets of foreign equity funds came to 19.4 trillion won (US$17.42 billion), up 1.1 trillion won (US$987.88 million).

The net assets of fund of funds and real estate funds reached 23.4 trillion won (US$21.01 billion) and 58 trillion won (US$52.09 billion), respectively, with a capital inflow of 400 billion won (US$359.23 million) and 500 billion won (US$449.03 million).

On the other hand, the interest rate on domestic treasury bonds hit a record high for the year as the base interest rate is expected to rise before the end of the year, weakening the bond market. Accordingly, bond funds showed a net outflow of 2.8 trillion won (US$2.51 billion) in a month. It is the largest net outflow after 3.6 trillion won (US$3.23 billion) of the net outflow in December last year at the time when the bond interest rates surged, which was so-called the Trump Tantrum effect, following the election of Donald Trump as American president.

The net assets of bond funds were 102.4 trillion won (US$91.96 billion) as of the end of last month, down 3.2 trillion won (US$2.87 billion) from the end of September. The net assets of domestic bond funds decreased 2.4 trillion won (US$2.16 billion) to 90.7 trillion won (US$81.45 billion), while that of foreign bond funds increased 800 billion won (US$718.46 million) to 11.7 trillion won (US$10.51 billion).

With a net outflow of 1.2 trillion won (US$1.08 billion) and 100 billion won (US$89.81 million), respectively, the net assets of derivatives Fund and special asset funds stood at 1.4 trillion won (US$1.26 billion) and 100 billion won (US$89.81 million). 

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