Double-digit growth in short term floating funds

Korea’s short-term floating funds posted double-digit growth for the second straight year last year as local asset managers raised money through repurchase agreements (RP), a central bank report showed Tuesday.

The volume of short-term capital including RPs, electronic short-term bonds and corporate paper reached 277 trillion won ($256 billion) in 2017, up 11 percent from 250 trillion won a year earlier, according to the report by the Bank of Korea (BOK).

The on-year gain slowed down slightly from the 14.6 percent increase in 2016, but it was a faster pace of growth than the 2.6 percent tallied in 2015 and the 8.6 percent gain in 2014.

The RP market led the increase as its volume vaulted 18.5 percent on-year to 61.5 trillion won last year, while electronic short-term bonds soared 24.9 percent to 43.1 trillion won.

The BOK report said local brokerages raised capital through RPs to increase leveraged investment in hedge funds and other debt funds.

Corporate paper, which accounts for nearly 55 percent of the sector, also expanded 7.3 percent to 151.2 trillion won over the one-year period, the report said.

Yonhap