Goldman Sachs: South Korea's rate hike pricing excessive, government bond yields may fall.

Goldman Sachs stated that as geopolitical tensions ease, there is room for stabilization in South Korean government bond yields; the current market pricing of at least four interest rate hikes in the next 12 months is clearly excessive. Despite weak domestic demand for Korean government bonds, the willingness of foreign investors to allocate capital is expected to offset this negative factor. South Korea's inclusion in global government bond indices is a long-term structural positive for its government bonds. As of April, foreign investors have increased their holdings of Korean government bonds by a scale of 21 trillion Korean won this year. This size far exceeds the quarterly average of 5 to 6 trillion Korean won in the past five years and is slightly higher than Goldman Sachs' annual net buying expectation of around 55 trillion Korean won.