Korea lights the way

Korea's debut issue of inflation-linked securities in March has injected much-needed life into the Asian inflation market, with some parties saying it will drive the development of inflation derivatives across the region. Kathleen Kearney investigates

Developments in Australia and Japan in the past decade have represented something of a setback for the Asia-Pacific inflation market (see box). But that may be set to change, with the Korean government launching its inaugural issuance of inflation-linked bonds - or linkers - on March 23. The move represents a clear statement to the market that the government is determined to closely supervise inflation levels. And the issuance may allow dealers to offer hedges using inflation derivatives to