The Rise of Acient Dragons

Conclusion

In conclusion, the Korean bond market is by far one of the most developed markets in Asia. With recent Credit Rating upgrades by Moody’s and Fitch on LT and ST Korean bonds, investors can be confident over governments’ and organizations’ creditworthiness, and the overall economic outlook and the market infrastructure of Korea. With impending QE3, a larger supply of capital inflows will follow, along with a rising export sector that drives Korea’s economy.

Even though (CONS AND REBUTTALS)

Korea – Less external vulnerability to banking sectors:

Korean financial system has become less vulnerable since 2008 due to the concerted efforts of the authorities. External buffers like higher foreign reserves and bilateral swap lines have been strengthened, while short-term debt has been reduced.

Korea – Fiscal Fundamentals

IMF economists also say that Korea’s fiscal prudence can help the country address the future challenge of increasing inclusiveness and dealing with an aging population. Korea also plans to raise their social spending and other labour market reforms. After the global financial crisis, due to fiscal consolidation measures, including tax reforms, the IMF said in a November 2010 report that South Korea's debt-to-GDP ratio would ease from 32% in 2010 to 24% in 2015. The IMF also projected that South Korea's fiscal surplus would increase from 1.4% in 2010 to 2.6% in 2015.

Korea – Economic Resilience

When US sovereign debt ratings were downgraded in August last year, enhanced financial soundness in the banking sector, growing foreign exchange reserves of Korea nd the introduction of macro-prudential measures contributed to stable movement of the South Korean won against the greenback.

The so-called "Triple Set" macro-prudential policies, which were adopted to alleviate rapid capital flows in and out of the country, were assessed to reduce the won's volatility

Also, volatility of KTB yields stayed below average (given the volatility in the US...