Bank of Korea reports December 2025 market trends with higher bond yields, a record KOSPI and declines in bank lending

The Bank of Korea published its December 2025 financial market trends update, describing a rise in Treasury bond yields driven by shifting domestic and overseas monetary policy expectations that later moderated, alongside a sharp equity rally and a year-end contraction in bank lending. The report also shows deposit growth slowing materially and funds at asset management companies edging down as money market fund outflows accelerated. By end-December, the three-year and 10-year Treasury bond yields stood at 2.95% and 3.39% respectively, while major three-month market rates rose and then retreated as institutional investors resumed deploying funds. The KOSPI climbed to 4,214 at end-December and reached a new all-time high of 4,692.6 on 13 January, supported by the semiconductor sector and expectations of improvements in the capital market system. Bank household lending shifted from a KRW 2.1 trillion increase in November to a KRW 2.2 trillion decline in December, with home mortgage loans falling KRW 0.7 trillion and other loans down KRW 1.5 trillion. Corporate lending moved from a KRW 6.2 trillion increase to a KRW 8.3 trillion decline, including drops of KRW 2.0 trillion for large corporates and KRW 6.3 trillion for small and medium-sized enterprises; net issuance also turned negative for corporate bonds (KRW 0.7 trillion) and for commercial paper and short-term bonds (KRW 5.3 trillion), while stock market fund-raising increased to KRW 1.8 trillion. Bank deposit-taking rose by KRW 7.7 trillion, led by a KRW 39.3 trillion increase in transferable deposits and a KRW 31.9 trillion fall in time deposits, and funds under management at asset management companies fell KRW 3.9 trillion as money market funds declined KRW 19.7 trillion.