External conditions would not be conducive as we expect US rates to continue to rise, and the US dollar to stay supported. Within the region, China’s sequential growth momentum seems to be slowing and several countries are also experiencing new infection waves.

Duncan Tan

Global investors are likely cautious around upcoming Fed taper and the prospects of weaker Asian currencies. Current wave of virus resurgences across Asia and the resultant downside risks to regional growth are also weighing on investor sentiments.

South Korean bonds tend to see outsized inflows during times of market volatility, due to foreign investors rebalancing from higher-beta Asian bonds into the safer Korean bonds.