Shift in Domestic Fund Market: From Bonds to Stocks
Recently, there has been a significant shift of capital towards equity funds in the domestic investment market. The rise of the KOSPI index has made stocks more attractive investment destinations than bonds. This shift is evidenced by a remarkable 16.43% return in equity funds over the last month. In contrast, bond funds recorded a return of -0.16%, impacted by low expectations of interest rate cuts.
Kim Ji-man, a researcher at Samsung Securities, predicts that bond yields will remain high for the foreseeable future, reducing the attractiveness of bond funds. Consequently, investors are reallocating their capital to higher-yielding equity funds. Particularly, the expectation of the Bank of Korea's policy rate freeze is further diminishing the allure of bond investments.
The bond market is experiencing relative sluggishness, leading to substantial capital outflows. On the other hand, equity funds are drawing investor interest, bolstered by the market's robust upward momentum. Investors seeking high returns are responding to these changing conditions with swift capital movements.
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