In the second quarter of this year, as expectations for interest rate cuts diminished and discussions on the supplementary budget continued, it was determined that the bond buying momentum of individual investors had stalled.
According to Yonhap Infomax on the 22nd, individual investors net purchased bonds worth 3.1646 trillion won in January, 3.3740 trillion won in February, and 3.9269 trillion won in March. However, as April approached, the buying momentum tapered off. The net purchase size in April was 2.0729 trillion won, and in May it remained at 2.5429 trillion won.
As of the 19th of this month, individual investors net purchased bonds worth 1.5571 trillion won in the over-the-counter market. Given that the average net purchase size per day this month has been 129.7 billion won and that there are seven trading days left until the end of the month, it is estimated that the net purchase size of individual investors in June will be 2.465 trillion won.
Considering the estimated figures for this month, the average net purchase size in the second quarter is about 2.3603 trillion won, which signifies a decline of more than 1 trillion won compared to the previous quarter. This shows that the buying momentum has noticeably weakened compared to the average net purchase size of 3.4885 trillion won for individual investors in the first quarter.
Typically, when bond interest rates rise, their investment appeal increases, leading to higher demand. However, in the second quarter, demand decreased compared to the first quarter even though interest rates rose. The 10-year government bond interest rate rose from 2.771% on March 31 to 2.874% on the 19th, an increase of about 10 basis points (1 basis point = 0.01 percentage point).
This is interpreted as the result of increased interest rate volatility in the second quarter and the spread of individual investors' wait-and-see sentiment. With the Bank of Korea showing a cautious stance on monetary policy, and due to rising inflation concerns resulting from the recent Middle Eastern crisis and soaring real estate prices, expectations for interest rate cuts have diminished compared to before. Additionally, the ongoing discussions of supplementary budgets in the political realm are analyzed as factors contributing to rising market interest rates.
Kim Ji-man, a researcher at Samsung Securities, noted, "Given that there will likely be heightened caution regarding the budget proposal to be announced at the end of August or early September, it is also highly likely that individual investors will continue their wait-and-see stance."