Investors in South Korea are pouring their money into short-term financial instruments as they turn increasingly risk-averse amid expectations of a US rate hike in December, a market tracker said Friday.

According to fund rater Zeroin, local money market funds registered a net capital inflow of 12.2 trillion won ($10.9 billion) in the first 18 days of October, a turnaround from a net outflow of 13.8 trillion won the previous month and 4.8 trillion won in August.

MMFs are short-term debt securities such as Treasury bills and commercial papers. They are widely considered as safe as bank deposits but with a higher return.  

The capital inflow to the MMFs was attributed to investors' flight to safety amid high expectations that the US Fed will likely jack up its key interest rate in December.

Market watchers predict robust US macroeconomic data has raised the chance of an interest rate increase in the world's largest economy within this year.

"Investors appear to be putting their money into MMFs, which generate lower returns than stock or bond funds, but are safer," said Moon Soo-hyun, a researcher at NH Investment & Securities Co.

Zeroin said local investors pulled a net 28.2 billion won from stock funds and 193 billion won from funds investing in domestic bonds over the cited period.

According to a separate tally by the Korea Financial Investment Association, the net asset value of MMFs came to 121.01 trillion won as of Oct. 18, recovering from a level below the 100 trillion won mark as of end-September. (Yonhap)