More investors swim to safer shores

Home > Business > Finance

print dictionary print

More investors swim to safer shores

A growing number of Korean investors are fleeing to safer assets as a safe haven from the uncertainties of the global economic slowdown, industry sources said yesterday.

The outstanding value of term deposits at five local lenders reached 418 trillion won ($368.7 billion) as of the end of July, up 15 trillion won from 403 trillion won tallied in December 2011, according to financial sources.

The corresponding figure for household debts, however, grew a mere 0.78 percent to 2.4 trillion won in the cited period, compared with the 7.8 percent increase throughout last year.

Real estate had been considered one of the most guaranteed means of investment in Korea, as the property market prospered for decades on the back of the country’s brisk growth, until it began faltering in the past few years on a slowing economy.

Instead, investors are shifting to safer assets such as bonds and pensions, expecting that the market is not likely to revive anytime soon.

The daily turnover of bonds averaged a total of 20 trillion won last month, up 44 percent from December. This stands in contrast with the stock market here, which saw its daily turnover tumble 28 percent in the same period.

“The epoch in which people borrow money to make bets in equities and real estate is coming to an end,” said a bank official.

“They just want to save their cash now because of a slumping market and unstable future.”

In the insurance market, the premium income from savings insurances sold by life insurers, which yield a higher interest rate based on the lump sum paid by the policyholder, bulked up to more than 1.6 trillion won in the first five months of this year, nearing last year’s total of 1.9 trillion won.

The amount of premium income from immediate annuities, in which the policy owner pays a large sum to the insurer in return for a regular pension later in life, has already surpassed the overall sales from last year as of end-June, according to the sources.

“If the preference for safer assets continues, a slump in consumption and investment is inevitable,” said Lee In-hyung, a chief analyst at the Korea Capital Market Institute.


More in Finance

Kospi sets another all-time high as optimism continues

Kim Kwang-soo named as sole candidate to head banking federation

Kospi hits record 2,602.59 as optimism continues after U.S. election result

Dollar deposits jump as punters bet on currency's rebound

Reservation app operator Yanolja to go public next year

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now