S.Korean bonds show muted reaction to WGBI inclusion; won inches lower

Reuters

S.Korean bonds show muted reaction to WGBI inclusion; won inches lower

Oct 10, 2024 at 2:24 am GMT

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KOSPI rises, foreigners net sellers

Korean won weakens slightly against dollar

S.Korea benchmark bond yield little changed

SEOUL, Oct 10 (Reuters) -Round-up of South Korean financial markets:

** South Korean treasury bond yields were little changed on Thursday while the won weakened slightly, despite the surprise inclusion of the country's sovereign bonds in a key global index.

** Stocks rose as chipmaker SK Hynix jumped, although rival Samsung Electronics extended losses.

** South Korean financial markets were closed on Wednesday.

** Global index provider FTSE Russell on Tuesday added South Korean government bonds to the FTSE World Government Bond Index (WGBI).

** The inclusion is expected to draw as much as 80 trillion won ($59.33 billion) into the domestic bond market, according to the government.

** But that will likely be in a long-term period, analysts say, as the addition will come into effect from November 2025.

** "Passive investment may be around $44.4 billion, or $11.1 billion per quarter over four quarters. Active flows may be comparable to this scale, while front-running flows may only come closer to actual inclusion," Citi analysts said in a note.

** December futures on three-year treasury bonds KTBc1 were down marginally, by 0.05 point, to 105.82 as of 0128 GMT.

** The most liquid three-year Korean treasury bond yield KR3YT=RR was up by 1.8 basis points to 2.959%, while the benchmark 10-year yield KR10YT=RR was down by 1.1 basis points to 3.073%.

** The won was quoted at 1,349.5 per dollar on the onshore settlement platform KRW=KFTC, 0.26% lower than its previous close at 1,346.0.

** In the stock market, the benchmark KOSPI .KS11 was up 12.50 points, or 0.48%, at 2,606.86.

** SK Hynix 000660.KS gained 5.45%, tracking the Philadelphia Semiconductor Index's .SOX overnight jump.

** Samsung Electronics 005930.KS fell 1% as analysts cut target prices after the company forecast its third-quarter profit to be lower than market expectations.

** Foreigners were net sellers of shares worth 287.5 billion won ($213.20 million). They also sold treasury bond futures.

($1 = 1,348.4900 won)

Reporting by Jihoon Lee; Editing by Subhranshu Sahu

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