지인과의 대화 (1)

Q :
Article I read that kind of scares me with the short KRW position is this.  Is this ‘structural demand for Korean bonds’ something that could affect fx rates in the near-term?


A :
Here is my very short commentary for attached article regarding 'structural demand for Korean bonds'.

As the article pointed out, considering the structural sluggish aspects of Korean economy like Japanifiaction, Korean bond rates is kind of attractive and it will cause money inflow to the Korean bond market. So it's the fact that the Japanifiaction could be pressure on USD/KRW through the bond market channel.

However, if the Korean economy is in the structural downward trend, there should be so much money outflow from Korean stock market also. None of the investors want to buy the stock of the nation heading into "lost twenty years'.

There should be some time gap between the money inflow to the bond market and the money outflow from the stock market. But in the long-run, if the Korean economy slowdown is structural, the money inflow to the bond market is definitely offset by the money outflow from the stock market, in my view.