Will Individual Bond Net Purchases Surpass 10 Trillion This Year?

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Recently, individual investors' investment sentiment has been shifting towards safe assets such as bonds.

According to the Korea Financial Investment Association on the 15th, individual investors have net purchased bonds worth 9.5474 trillion won in the over-the-counter bond market from the beginning of this year until the 12th of this month.

This figure exceeds 2.7 times the net bond purchases by individuals during the same period last year, which was 3.481 trillion won. It is also significantly larger than last year's total net bond purchases by individuals, which amounted to 4.5675 trillion won.

If the recent trend continues, the net bond purchases by individuals are expected to easily surpass 10 trillion won soon.

The bond trading data by investor type publicly disclosed by the Korea Financial Investment Association dates back to 2006. According to this data, the highest annual net bond purchases by individuals was 6.5143 trillion won in 2007.

This is the first time that the annual net bond purchases by individuals have exceeded 10 trillion won, including before 2006. This contrasts with the declining proportion of individual investors in the domestic stock market.

From the beginning of the year until the 12th of this month, individuals' net purchases of KOSPI stocks were about 24 trillion won, which is about one-third of the approximately 71 trillion won during the same period last year, showing a sharp decrease.

Amid growing concerns about an economic downturn, individual investors' sentiment is shifting towards safe assets including bonds. As demand for bonds increases and prices rise, bond yields fall.