As of the end of the second quarter (April to June) of this year, the balance of overseas securities investment by Korean institutional investors hit a record high. This was attributable to the fact that Korean institutional investors failed to find proper investment targets in Korea and turned their eyes to overseas countries as low interest rates were continuing in Korea.
According to the Bank of Korea (BOK) on August 30, major Korean institutional investors' balance of overseas stock investments such as overseas stocks and bonds (based on market value) stood at US$210.1 billion in the second quarter of this year, the highest-ever one. The figure spiked by US$17.1 billion from the previous quarter.
"This is because asset management companies and insurers scaled up their investment in foreign bonds, and asset management companies continued to invest in overseas stocks," the BOK explained the reason for the highest-ever increase.
By institutional investor, asset management companies and insurance companies' investment balances at the end of the second quarter increased by US$11.6 billion and US$ 3.8 billion over the previous quarter, respectively. In the same period, that of foreign exchange banks increased by US$1.8 billion while that of securities firms slipped by US$100 million.
By investment grade, the balance of investment in foreign bonds swelled by US$10.9 billion, the largest increase from the previous quarter. During the same period, the balance of investment in foreign stocks grew by US$5.6 billion and the balance of investment in Korean papers jumped by US$600 million.
Equity investment was increased mainly by asset management companies, leading to an increment in the balance of investments. Investments in bonds surged due to continued demand for overseas asset management by insurers and asset management companies.