The Bank of Korea published its March 2026 Financial Market Trends report, highlighting a sharp rise in Korean Treasury and corporate bond yields and a steep decline in equity prices amid heightened volatility. The report links the moves to inflation concerns driven by higher global oil prices following the war in the Middle East, shifting expectations for monetary policy in major economies, and a stronger global risk-off backdrop. Korean Treasury yields rose markedly, with the three-year yield at 3.55% in March (3.04% in February) and the 10-year at 3.88% (3.45% in February), alongside higher corporate bond yields across rating buckets. The KOSPI fell to 5,052 at end-March from 6,244 in February, with foreign investors net selling KRW 40.5 trillion of domestic stocks, described as the largest monthly net sell-off on record. In banking flows, household lending shifted to a small increase (+KRW 0.5 trillion in March after -KRW 0.4 trillion in February) as other loans turned positive, while corporate lending continued to expand (+KRW 7.8 trillion after +KRW 9.6 trillion), led by both small and medium-sized enterprises and large firms. Bank deposit-taking remained positive (+KRW 20.5 trillion after +KRW 47.3 trillion), but funds under management at asset management companies swung to a sharp decline (-KRW 29.1 trillion after +KRW 48.6 trillion), concentrated in stock-type funds.
Bank of Korea 2026-04-08
Bank of Korea reports March surge in Korean bond yields and KOSPI slump with record KRW 40.5 trillion foreign net selling
The Bank of Korea’s March 2026 Financial Market Trends report records a sharp rise in Korean Treasury and corporate bond yields and a steep fall in equity prices amid heightened volatility, driven by inflation concerns linked to higher global oil prices, shifting monetary policy expectations in major economies, and a stronger global risk-off backdrop. The KOSPI dropped to 5,052 from 6,244, with foreign investors recording a record monthly net sell-off of KRW 40.5 trillion, while bank lending and deposits increased. Funds under management at asset management companies fell by KRW 29.1 trillion, led by stock-type funds.