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The balance of U.S. dollar-denominated deposits at banks and gold bar sales have been on a sharp increase over the past few months as investors prefer safe assets amid growing uncertainties caused by the U.S.-China trade feud and Japan's export restriction measures.
According to the Bank of Korea (BOK), U.S. dollar-denominated deposits at banks jumped to $59.9 billion (70.5 trillion) in June, up $4.25 billion from a month earlier.
The figure was up $6.44 billion from two months before when it was $53.4 billion.
The deposits are the sum of the U.S. dollars held by Koreans, foreign businesses and foreigners that have lived in Korea for over six months.
The amount was part of $70.38 billion held in foreign currency including Chinese yuan, Japanese yen and euros, which also jumped $4.77 billion from a month before.
Most notable was an increase of $830 million in deposits held by individuals which reached $14.71 billion.
Corporate savings also increased by $3.94 billion to $55.67 billion during the same period.
Companies and individuals upped their foreign currency holdings amid recent weakening of the dollar.
The won-dollar exchange rate stood at 1,154.7 won at the end of June, down 36.2 won from 1190.9 a month before.
The increase is a strong indication that fears of further possible negative economic developments continue to grip investors.
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Another known safe asset ― gold ― has seen its sales peak over the past few months.
According to data by KB Kookmin Bank, KEB Hana Bank and NongHyup Bank, the three lenders sold a combined amount of about 32.4 billion won worth of gold bars in the first half of 2019, a 91.5 percent increase from a year earlier.
The notable turn seeking safer investment comes amid a stagnant stock market following worse-than-expected corporate earnings.
The benchmark KOSPI and KOSDAQ saw its daily trading volume plunge to about 6.5 trillion won as of mid-July, down 20.7 percent from around 5.1 trillion won a year before. Individual and institutional investors sold off 4.4 trillion won and 1.4 trillion won, respectively, during the period.
Investors will continue to prefer safe assets for the time being, according to Yun Chang-hyun, an economist at the University of Seoul.
"The recent trade dispute between Korea and Japan, coupled with the long-dragged-out one between the U.S. and China, will continue to pose a major risk to investment sentiment, already dampened by the sluggish economy," Yun said.
