Korean asset market awash in near $3 trillion liquidity as of Oct

2021.01.06 14:36:47

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As much as $3 trillion money have been circulating as of October last year, fuelling frenzied housing and stock buying spree in South Korea, data from the Bank of Korea showed.

According to data released by the Bank of Korea (BOK) on Wednesday, the nation’s M2, a measure of money being circulated in the market, stood at 3,150.5 trillion won ($2.9 trillion) as of October last year, up 9.7 percent from the same month a year ago.

M2 is a broad yardstick of money supply that includes cash, checking deposits and easily convertible near money such as money market fund (MMF), installment savings, certificates of deposits and repurchase agreements (RP) with a maturity of less than two years.

The BOK said the ample liquidity in the market has also been driven by the borrowing spree of households and corporations who are taking advantage of the record-low interest rate. A huge part of the borrowed money is estimated to have flowed into the stock market to fuel the record-breaking rally.

The nation’s main Kospi market exceeded the 3,000-mark for the first time on Wednesday morning.

The outstanding balance of household loans extended by five commercial lenders – KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank – reached 670.1 trillion won as of the end of December, up 9.73 percent from a year earlier.

Credit loans jumped 21.6 percent over the period, rising three times faster than mortgage-backed loans that grew 8.32 percent.

Credit-based borrowings soared ahead of retail subscription of highly-anticipated initial public offerings (IPOs) – SK Biopharmaceuticals in July, Kakao Games in September and Big Hit Entertainment in October, implying that much of the borrowings could have went into the stock market.

By Choi Mira

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