South Korean bond prices rose on Wednesday as cash-rich institutional investors sought bargains after recent drops, but caution remained ahead of the central bank's policy meeting later this week. Local retail stock investors have been selling out of the local stock market in recent weeks to book profits after its rally, and analysts saw the trend benefiting bond markets.
"Domestic institutions and retail investors have been selling stocks and some of the money is flowing into the bond and money market products," said Yeom Sang-hoon, a fixed-income analyst at SK Securities. The benchmark 5-year treasury bond yield fell 7 basis points to 4.42 percent and the 3-year treasury bond yield shed 2 basis points to 3.82 percent, while June treasury bond futures added 12 ticks to 110.82.
Data from the Seoul stock exchange shows retail investors sold a net 209 billion won ($185.9 million) worth of stocks on the main board on Wednesday and institutional investors were also net sellers. In the money market, the 91-day certificate of deposit (CD) rate held steady at 2.63 percent, pausing after its steep 15-basis-point decline over the past two sessions sparked a selloff in short-term bonds.
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