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Gold/Mining/Energy : Gold Price Monitor
GDXJ 124.080.0%Feb 2 4:00 PM EST
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To: lorne who wrote (5983)1/15/1998 5:25:00 PM
From: lorne  Read Replies (2) of 116957
 
Korea Securities Market on Alert for Hot Money
January, 15 1998

Stock prices have risen by a sharp 44% during the last 20 days since December 24, when the IMF announced it would prematurely send part of its bail out fund, with the one exception of January 9 when the moratorium crisis in Indonesia peaked. However experts' exuberance in the securities market was quickly replaced by anxiety over the growing possibility of hot money.

The decisive factor in the market's rise was the foreign investors who bought 735.6 billion won in shares since the new year. Up to the beginning of the year, most of the short term funds were hot money, but recently there has been a strengthening trend towards long term investment. Experts say that the substantial part of the investors' money is hot as they are reluctant to move to the bond market which enjoys the higher interest rate of 30%. As testimony they point out that foreign investors have bought only 63 billion won in bonds from the beginning of the year.

They say that investments now must be made carefully as there are signs that the hot money that entered the market at the end of last year has already achieved its maximum profit and may move out. Foreign buying might continue, but if the environment deteriorates the money will be promptly withdrawn. They added that the security market in January may be a typical example of a high risk trend.
Can someone please explain the term hot money as it applies here.
Lorne
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