"There has been much debate lately about whether central banks such as the Bank of Korea have actually sold U.S. Treasuries or just bought fewer to achieve diversification," points out Adrian Foster, head of capital markets in Beijing. "Lee is saying they've actually sold pre-existing stock." Nomura's Darby says that right now he is recommending Korea to investors in the region, because of the relatively low valuation of equities there and because of possible continued rate tightening in other Asian markets. "Asian investors now appear stuck between allocating assets to the overbought Indian and Chinese markets, where valuations are also unfavorable, or to the deep cyclical economies of Korea and Taiwan," Darby writes. "We favor Korea."