South Korea's stock market has bounced back harder amid the coronavirus pandemic than any other major bourse in the world, and bond inflows lead Asia, as investors bet Seoul's handling of the crisis will see it through sooner and stronger than others.
Asia's fourth-largest economy is among the first countries to bring a major outbreak of the virus under control, with a vigorous without mandatory lockdowns or a gigantic debt-funded rescue package.
With one of the world's most vigorous testing regimes and social distancing campaign in place, South Korea's confirmed cases of the virus have been kept to less than 11,000 so far, with 240 deaths.
That has foreigners buying bonds at a clip for their reliable yield, while the benchmark Kospi stock index has soared by nearly a third from March lows as investors, from dabblers to institutions, buy into the recovery ride.
"It is one of the examples of managing the crisis really well," said Esty Dwek, head of global market strategy at $1 trillion French fund manager Natixis Investment Managers.
"We think it'll be one of the winners, along with emerging Asia, compared to other regions that are likely to suffer much more," she said. "It is one of the areas (to which) we've moved some money only a few weeks ago."
The Kospi index is up 31% from a low point hit on March 19, a performance matched only by smaller Thailand, and bettered only by Argentina's S&P Merval, which is less than 1% of the Seoul market's size by value. The jump has come even as South Korea's exports have cratered and the economy has contracted.
South Korean bonds posted a third straight month of inflows in March, attracting $3.6 billion in a month when Asian bonds as a whole had the biggest foreign outflows in seven years.
A 1.56% yield on 10-year Korean government debt makes it an attractive trade, compared with a yield of 1.23% in Thailand or just 0.078% in France and 0.292% in Britain, which have the same credit rating.
"Simply put, there is no other emerging country with similar credit rating, that can yield this much return," said Shin Hwan-jong, head of fixed income at NH Investment and Securities in Seoul.
A 6% slide in the Korean won this year versus the U.S. dollar is also shallower than 10% drops in the similarly risk-sensitive Australian and New Zealand dollars.