By Yoon Ja-young
Staff Reporter

The asset market, which heated up upon abundant liquidity following several economic stimulus packages, is rapidly cooling off. Transactions are faltering and prices are falling on both bourses and the real estate market, causing analysts to be concerned that things aren’t likely to recover in the short term, as Dubai’s debt problem could temporarily freeze global liquidity.

The most serious sign is falling transactions in the asset markets. The daily stock transaction averaged 277.9 million shares this month, one third of the daily average in April and May when over 700 million shares were traded.

Liquidity is flowing out of funds as well. The money invested in equity funds stood at slightly over 129 trillion won, 11 trillion won less than the end of October.

Real estate transactions have also turned sluggish. According to the Ministry of Land, Transport and Maritime Affairs, apartment transactions in Seoul totaled 6,929 last month, down 16.6 percent from the previous month. Things are more serious in Gangnam, Seocho and Songpa districts, the luxurious residential areas in southern Seoul. Apartment transactions in these three districts totaled a mere 893, falling to half that of the previous month ― the lowest level this year.

Asset Prices Falling

Fewer transactions mean prices are falling. The KOSPI lost 75.02 points, or 4.69 percent, Friday, closing at 1,524.50.

The index marked over a 13 percent rise for two consecutive months in March and April, and started a mini rally in July. During the past few months, however, it has lost steam. The index fell 3.55 percent from the end of October, falling for two consecutive months since September when it shed 5.53 percent.

Apartment prices have also turned negative as demand for homes is quickly disappearing in the market following the strengthening of mortgage regulations.

According to Real Estate 114, a housing market information provider, apartment prices in Seoul fell by 0.03 percent last week, continuing the slide.

``There is no demand on the market. It is likely to remain weak in December as well,’’ said Lee Mi-yun, an analyst at Real Estate 114.

Recovery Unlikely in the Near Future

The global market’s concern triggered by Dubai’s request for a moratorium on its debt is expected to put further downward pressure on the asset market. ``Global preferences for risky assets will decrease, compared with before the Dubai shock. This will hinder a year-end rally on the bourse, which is already pressured by concern over economic fundamentals,’’ said Park Seok-hyun, a strategist at KTB Securities.

Korea Investment & Securities analyst Park So-yeon echoed that liquidity’s preference for safe assets is likely to continue. ``As a gradual rise of the market’s interest rate is inevitable, the flow of liquidity into banks from asset management firms is likely to accelerate,’’ she said.

Samsung Economic Research Institute recently pointed out that 130,000 unsold new apartments in the provinces would delay a market recovery.

chizpizza@koreatimes.co.kr