Idle money hit record high amid uncertainties in 2013

By 정주원
  • Published : Mar 16, 2014 - 10:02
  • Updated : Mar 16, 2014 - 10:02

Short-term funds flowing in the South Korean financial system rose to a record high last year as economic uncertainties and a bearish run on the local stock market prodded people to manage their money on a short-term basis, data showed Sunday.

The country's short-term funds, including currency in circulation, demand deposits and money parked for stock investment, amounted to a record 712.89 trillion won ($665.94 billion) as of the end of December, up from 666.36 trillion won posted a year ago, according to data based on figures from the central bank and the Korea Financial Investment Association.

The 7-percent rise in 2013 also marks the sharpest on-year gain since 2009 when the comparable figure was 19.8 percent, according to the data.

The value of such funds hiked to 646.68 trillion won in 2009 from 539.57 trillion won in 2008 when the country was in the midst of global financial turmoil, and had been hovering around the 650-trillion level till 2012, data showed. 

Market watchers said investors are refraining from putting their money into long-term investment vehicles amid still lingering economic uncertainties and the lackluster performance of the local stock market.

A long streak of low interest rates dragged down deposit rates, making bank customers reluctant to invest in safer time deposits, they said, adding that the slumping property market is also making investors cautious about buying houses.

The Bank of Korea, the country's central bank, has maintained its key interest rate at a two-year low of 2.5 percent since May last year.

South Korea's stock market also has been showing a sluggish performance, with its key stock index, the KOSPI, suffering a 4.6 percent dip this year through Friday.

"People are having difficulties in finding viable and high return-promising investment tools to park their money," said Lee Jong-woo, an analyst at I'M Investment & Securities. "Given the low interest rates, the trend (an increase in short-term funds) will continue."

Concerns over a slowdown in the Chinese economy, coupled with political tensions in Ukraine, may further nudge the local stock market lower, increasing the amount of idle money, the analysts said. (Yonhap)