Trend Renminbi and Chinese capital gain weight in Korea through a balloon effect

Summary

As the renminbi's global reach expands and US financial restrictions on China tighten, the currency's weight in Korea's trade settlement and capital markets is rising quickly. The report labels this a balloon effect, in which pressure applied in one place pushes Chinese money toward others. Yuan settlement between Korea and China is increasing, and Chinese funds have been pouring into Korean bonds and equities. Chinese money has for several years been the leading foreign player in Korean bond and real estate investment and in the interbank foreign-currency call market. Concerns are emerging that such capital could be weaponised and that transparency will suffer as investors diversify into vehicles such as private equity funds.