Short-term funds flood system in 2012

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Short-term funds flood system in 2012

Short-term funds in the Korean financial system rose to a record high last year as a long streak of low rates and the sagging property market prompted more people to manage money on a short-term basis, data showed yesterday.

The country’s short-term funds, including M1 and money parked for stock investment, amounted to 666.4 trillion won ($616.8 billion) as of the end of 2012, up from 649.9 trillion won the previous year, according to the data based on figures from the central bank and the Korea Financial Investment Association.

M1, the narrowest gauge of money supply, covers currency in circulation, demand deposits and savings at money market deposit accounts.

Short-term funds tend to increase when investors are unable to find adequate long-term investment vehicles amid a protracted economic slump, analysts say.

The value of such funds jumped to 646.7 trillion won in 2009 from 539.6 trillion won in 2008 when Korea was in the midst of the global financial turmoil, data showed.

The data came as investors are refraining from putting their money into long-term investment products due to still-high economic uncertainty.

A long streak of low rates and the slumping property market have been making investors cautious about investing in safer time deposits and buying houses. Yonhap

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