Short comment
Yields in Korean bond market are going down with full liqudity.
Foreigners keep entering to the market in spite of decreasing swap basis.
And overall players are trying to avoid volatility of regional stock market.
During market-hour, future of 10y government bond has exerted its strength since early August.
The price of the future has been up about 1.6% from Aug 1 to yesterday.
Yield of 3y government bond gone below 2%, and that of the 10y security gone below 2.4%.
The numbers are even lower than those at end of the last year.
Domestic investors, who can't get benefit of minus swap basis, are wanting the higher yields, so entering to corporate bond markets again.
Hyundai Steel (004020.KS) issued corporate bond of KRW200bn, and KRW1100bn want the security.
SK Hynix (000660.KS) issued the bond of KRW250bn, and KRW1400bn want the security.
Even Hanjin Kal (180640.KS), which has credit rate of BBB0 and recorded net losses during first half of this year, issued the security of KRW50bn, and got the demand of KRW230bn.
It means that domestic investors have enough liqudities to provide to capital markets.
BOK is very discrete in raising the benchmark rate - 7days repo -, and they should keep sending messages of easing stance because sluggish indices are pusing BOK and government nowadays.
The number of new employment in the country was just 5,000 in last month.
Even though I believe there is a possibility of abrupt rise in yields of government bonds with decreasing swap basis, liqudities in the market will be alive for a long time and could be provided to the premium of corporate bonds.
And it is another reason why Korean stock market will be not in the big trouble: the rate will be capped.
Yields in Korean bond market are going down with full liqudity.
Foreigners keep entering to the market in spite of decreasing swap basis.
And overall players are trying to avoid volatility of regional stock market.
During market-hour, future of 10y government bond has exerted its strength since early August.
The price of the future has been up about 1.6% from Aug 1 to yesterday.
Yield of 3y government bond gone below 2%, and that of the 10y security gone below 2.4%.
The numbers are even lower than those at end of the last year.
Domestic investors, who can't get benefit of minus swap basis, are wanting the higher yields, so entering to corporate bond markets again.
Hyundai Steel (004020.KS) issued corporate bond of KRW200bn, and KRW1100bn want the security.
SK Hynix (000660.KS) issued the bond of KRW250bn, and KRW1400bn want the security.
Even Hanjin Kal (180640.KS), which has credit rate of BBB0 and recorded net losses during first half of this year, issued the security of KRW50bn, and got the demand of KRW230bn.
It means that domestic investors have enough liqudities to provide to capital markets.
BOK is very discrete in raising the benchmark rate - 7days repo -, and they should keep sending messages of easing stance because sluggish indices are pusing BOK and government nowadays.
The number of new employment in the country was just 5,000 in last month.
Even though I believe there is a possibility of abrupt rise in yields of government bonds with decreasing swap basis, liqudities in the market will be alive for a long time and could be provided to the premium of corporate bonds.
And it is another reason why Korean stock market will be not in the big trouble: the rate will be capped.
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