KB Securities Surpasses 4.3 Trillion KRW in Retail Bond Sales in Q1

KB Securities announced on the 2nd that, following last year, customer interest in retail bonds has continued this year, with retail bond sales in the first quarter surpassing 4.3 trillion KRW.

Among these, sales of government bonds to individual investors recorded over 1.1 trillion KRW, accounting for about one-third of KB Securities' total retail bond sales, making them the most popular bonds.

Since the global interest rate hike cycle ended this year and there is anticipation that benchmark interest rates in Korea and the United States may be lowered, many customers appear to be investing in government bonds. According to the Korea Financial Investment Association, individual investors purchased approximately 4.2 trillion KRW worth of government bonds in the bond market during the first quarter of this year, representing 31.8% of total bond purchases.

Investing in treasury bonds offers an annual interest rate in the low to mid-3% range, and except during periods of rapid interest rate fluctuations, buying and selling can be relatively free. Additionally, investors can choose between low-coupon treasury bonds, which can reduce tax burdens depending on investment purposes, and long-term treasury bonds aimed at capital gains, which is also considered a factor contributing to their popularity.

Kim Young-dong, Head of the Bond Products Department at KB Securities, said, "After the announcement of the U.S. Federal Open Market Committee (FOMC) results in March, there have been opinions in the market that the timing of interest rate cuts may be delayed, but in the mid to long term, the market interest rates are expected to gradually decline, which is driving bond investment sentiment. If interest rate cuts begin in the second half of this year, interest in credit bonds is expected to increase further, and among them, high-grade credit bonds are considered promising."

Interest in foreign currency bonds is also high. By the first quarter, Brazilian government bonds recorded sales of 201.4 billion KRW, and U.S. government bonds recorded 221.8 billion KRW in sales, representing increases of 165% and 34%, respectively, compared to the same period last year.

The main reason Brazilian government bonds have recently regained attention appears to be the trend of interest rate cuts in Brazil along with the stable performance of the Brazilian real exchange rate. U.S. government bonds are traditional safe assets that investors choose whenever global economic uncertainty increases. U.S. government bonds tend to attract investors who prefer low risk, which is attributed to the size and stability of the U.S. economy.

Lee Min-hwang, Head of the Asset Management Solutions Center at KB Securities, stated, "Investors interested in bond investments may need a deep understanding of how to act under various investment environments and how to approach different investment strategies. Accordingly, KB Securities plans to expand its lineup from various treasury bonds to include high-grade credit bonds to meet these customer demands and enhance customer returns."