Burned by China Default, Korean Funds Have New Target: Qatar - Bloomberg:
South Korea’s yield-hungry investors who were spooked by a Chinese default are shifting their sights to the other end of the continent, to the Middle East.
One hot product is short-term securities backed by deposits at Middle East banks. Korean money managers increased such purchases 23 percent in the first half to 10.3 trillion won ($9.2 billion), with Qatar making up the majority, according to data from Korea Investors Service. Meanwhile, investments in products linked to Chinese bank deposits plunged 43 percent to 9.2 trillion won.
A default by China Energy Reserve & Chemicals Group Co. in May ruined demand for Chinese debt among Korean short-term investors such as money market funds, because other bonds from the company had been repackaged into commercial paper sold in the Korean market. Korean investors are looking instead at Middle Eastern bank deposits that typically offer better yields than local or Chinese banks.
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