More investors pull money out of local bonds

Funds that invest in domestic bonds suffered massive cash outflows in January as investors pulled part of their money out of the funds amid concerns over the accelerating pace of rate hikes, industry data showed Monday.

According to the data compiled by industry tracker FNGuide, domestic funds have logged an outflow of 879 billion won ($752 million) as of Jan. 25, and saw a cash outflow of 3.33 trillion won in the past three months as concerns over rate hikes in the United States emerged.

Bond yields have been on a steady rise since the second half of last year with the yields on three-year Treasuries surging to 1.687 percent on Wednesday, from 1.308 percent at the end of August, which means bond prices tumbled sharply during the cited period.

In contrast, funds that invest in overseas bonds have posted a cash inflow of 367 billion won this month through Jan. 25, the data showed.

“After Donald Trump was elected as the next U.S. president, bond yields have surged,” said Oh Eun-soo, an analyst at KB Securities. “The trend [of cash outflows] will continue for the time being amid increased inflationary pressure.”

Separate data compiled by another industry tracker KG Zeroin showed that the country’s stock funds have suffered massive money outflows in the first three weeks of this year apparently on profit-taking.

Domestic stock funds, excluding exchange traded funds, posted net outflows of 1.03 trillion won this year as of Monday, the data showed.

YONHAP