SARB’s purchase of Korean sovereign bonds signal another positive for won
Yesterday officials at South Korea’s Financial Supervisory Service announced that the South African Reserve Bank (SARB) made its first purchase of South Korean government bonds this month, with the financial press reporting between USD 500m – USD 1bn of purchases for June. We have previously discussed that relatively low foreign ownership of Korean government securities (9.2% as of December) relative to mature bond markets such as Australia (70% foreign ownership) created the potential for further inflows into KRW by foreign reserve managers and sovereign wealth funds. The SARB’s purchase is yet another indicator of this gradual diversification of reserve manager assets towards a greater share of Korean bonds.
Read the full report: UBS