NH Investment & Securities "Chaean Fund Activation, Warmth Starting from Top-Tier Bonds"

[Click e Stocks] NH Investment & Securities
Recommendation to Increase Corporate and Bank Bond Holdings Following Activation of Chaean Fund

[Asia Economy Reporter Junho Hwang] NH Investment & Securities expects the Cha-an Fund to be fully operational starting this week as part of the bond market stabilization policy, anticipating that funds will primarily flow into higher-rated bonds.

Hwang Kwang-yeol, a researcher at NH Investment & Securities, stated on the 3rd, "The Cha-an Fund will be a major purchaser in the short-term money market and the issuance and distribution markets of credit bonds for the time being," adding, "The financial authorities' regulatory easing on commercial banks will act as a factor reducing the burden of bank bond issuance."

The market stabilization policy announced by the government on the 23rd is divided into market purchases through the Korea Development Bank and the Cha-an Fund, regulatory easing on commercial banks regarding commercial paper (CP) and loan-to-deposit ratios, and liquidity support from the Bank of Korea. Among these, the Cha-an Fund's scale is 1.6 trillion KRW, and it plans to purchase CP and corporate bonds.

The researcher said, "Although the specific targets and methods of purchase have not been announced, it is judged to be similar to past executions," explaining, "The Cha-an Fund will be a major purchaser in the short-term money market and the issuance and distribution markets of credit bonds for the time being."

He continued, "Currently, the liquidity level of commercial banks is sound, but regulatory easing will expand lending and increase the Cha-an Fund's investment capacity," adding, "Liquidity support through the Bank of Korea's expansion of eligible collateral securities for loans and repurchase agreement (RP) purchases is also expected to be implemented soon."

The researcher recommended, "Due to the Legoland issue, the likelihood of government support for corporate bonds has increased, and with regulatory easing and policy support from the Bank of Korea, it is advisable to increase the proportion of bank bonds, which have reduced supply and demand burdens," further explaining, "For installment finance bonds and corporate bonds, selective investment focusing on higher-rated bonds under financial holding companies with parent company support capacity and sound fundamentals is a reasonable approach."

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