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Financial Crisis Rumors Squashed

Posted September. 11, 2008 09:05,   


Rumors of a financial crisis in Korea have been proven wrong, as foreign investors bought more bonds yesterday instead of pulling out their cash as feared.

Government bonds worth five trillion won owned by foreigners matured yesterday, but no mass outflow of funds occurred.

Rumors that North Korean leader Kim Jong Il has serious health problems also did not affect South Korea`s financial market.

The Financial Supervisory Service said foreign net buying of bonds reached 178.3 billion won Tuesday and 607.8 billion won yesterday. The net amount of domestic bonds bought by foreign investors reached almost 800 billion won for two days when government bonds worth 5.7 trillion won matured.

Accordingly, the amount of foreign net buying of bonds Sept. 1-10 surged to 2.035 trillion won.

A source at the financial watchdog said, “It remains to be seen how much money foreign investors will reinvest in Korea. Given recent developments and our analysis, however, foreign investors are highly likely to reinvest a large chunk of their money here.”

Interest rates also fell. The three-year government bond yield dropped three basis points from a year ago to 5.73 percent and the five-year government bond yield also fell three basis points to 5.77 percent.

The won also gained ground on the dollar, rising 5.8 points to close at 1,095.50 per dollar.

The benchmark stock index KOSPI also jumped 10.48 points (0.72 percent) to close at 1,464.98.