Selling Spree
The Financial Supervisory Service announced on Aug. 18 that foreign investors sold a net 2.261 trillion won (US$1.907 billion) of Korean stocks last month. The amount had been only 389 billion won (US$328 million) in the previous month. They sold a net 2.618 trillion won (US$2.210 billion) of Korean bonds in July as well, which was the largest amount since the net outflow of 3.9 trillion won (US$3.3 billion) in December 2011.
The value of the listed Korean stocks owned by foreign investors decreased 14.5 trillion won (US$12.2 billion) to 430.577 trillion won (US$363.307 billion) between June and July. It is equivalent to 28.9 percent of the aggregate market value, the lowest percentage since July 2009. The value of their going-public bonds declined 2.6 trillion won (US$2.2 billion) to 102.974 trillion won (US$86.9420 billion) during the same period.
The selling spree can be attributed to mounting external uncertainties, including the possibility of an interest rate hike by the Fed, and the recent rapid rise in won-dollar exchange rate. U.K. investors sold shares worth 1.6214 trillion won (US$1.3679 billion), followed by those in the Cayman Islands (US$656.8 million) and Germany (US$238.2 million). U.S. investors bought stocks worth 1.5754 trillion won (US$1.3291 billion), while Israeli and Japanese investors recorded net purchases of 299.7 billion won (US$253.0 million) and 169.2 billion won (US$142.9 million), respectively.