Korea’s money supply sees fastest growth in decade as foreigners return to stock market
Aug 13, 2020 (Gmt+09:00)
South Korea’s money supply grew at a quicker pace in June than it has in a decade, as foreign investors, who shunned risky assets just following the COVID-19 outbreak, returned to the local stock market on expectations of improved corporate earnings.
The country’s M2, a measure of money supply, gained 9.9% year-on-year to a record 3,077 trillion won at the end of June, according to Bank of Korea data on Thursday. That’s the fastest yearly growth since the 10.5% gain in October 2009.
From the previous month, money supply grew by 23.2 trillion won or 0.8%, slowing from an increase of 35.3 trillion won in May.
M2 measures how much money is being circulated in the market. It includes cash, demand deposits, savings deposits, bank debentures and other short-term money that can be easily converted into cash.
The rise in money supply in June was fueled by funds held by households and non-profit businesses, which recorded a combined increase of 16.9 trillion won. In contrast, corporate loans posted a gain of 9.1 trillion won.
Ample liquidity has prompted investors to jump back into the property market, causing concerns for government officials, who in recent weeks unveiled a series of measures to curb speculative investment in the real-estate sector.