Surging Stock Market Waiting Funds... MMF Surpasses 170 Trillion Won

Set Balance Records 174.1225 Trillion
Corporate Fund Inflow Accounts for 86%
Impact of Surge in Corporate Bond Issuance Before Interest Rate Hike

[Asia Economy Reporter Minji Lee] As market liquidity continues to flow, the assets of money market funds (MMFs), which are funds surrounding stock market capital, have reached an all-time high.

According to the Korea Financial Investment Association on the 10th, as of the 6th, the MMF balance was 174.1225 trillion won, an increase of 17.9786 trillion won compared to the previous month. This is the first time MMFs have exceeded 170 trillion won, with the previous record being 168.1499 trillion won recorded on the 6th of last month. MMFs invest in short-term high-quality bonds such as government bonds or corporate commercial papers with maturities within one year, allowing frequent deposits and withdrawals, thus being called a short-term fund station.

Notably, the inflow of funds into MMFs has intensified mainly among corporations. The MMF balance for corporations reached a record high of 150.0631 trillion won (86% share), while individuals accounted for 24.5659 trillion won (14%). Compared to one month ago (139 trillion won) and one year ago (122 trillion won), corporate MMF balances increased by 8% and 22%, respectively.

Although market liquidity has increased more than before, the inflow of funds is prominent because there are fewer attractive places to invest. A financial investment industry official explained, "As concerns about rising interest rates increase, companies are pre-raising funds through corporate bond issuance, which has expanded market liquidity. Fund inflows are particularly noticeable among institutions with large fund management scales such as banks and insurance companies." In fact, the net issuance of corporate bonds last month was 7.2087 trillion won, more than twice the usual amount (3 to 4 trillion won). This reflects demand to increase fund raising through corporate bond issuance before interest rates rise.

With the intensified inflow of funds mainly from corporations, many asset management companies saw their managed funds increase by about 1 trillion won compared to the previous month. The company with the largest inflow was Samsung Asset Management, which received 2.3353 trillion won in one month. This was followed by Hana UBS Asset Management (2.0086 trillion won), Shinhan Asset Management (1.8507 trillion won), NH-Amundi Asset Management (1.5355 trillion won), IBK Asset Management (1.2542 trillion won), and Plus Asset Management (910.5 billion won).

Some asset management companies have started not accepting ultra-short-term funds to manage sudden fluctuations in returns. This is because when ultra-short-term funds leave the fund, it becomes difficult to manage returns. A financial investment industry official said, "There are still good assets (such as short-maturity commercial papers) available for MMFs, so we are not considering closing the fund immediately, but we are proactively informing sales agencies about the remaining scale."

This content was produced with the assistance of AI translation services.