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Foreign Investors Withdraw Funds from S. Korean Bond Market in 5 Months
No Rapid Outflow of Funds
Foreign Investors Withdraw Funds from S. Korean Bond Market in 5 Months
  • By Yoon Young-sil
  • August 13, 2019, 09:26
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Foreign investors withdrew funds from the South Korean bond market for the first time in five months.

Foreign investors remained net buyers of South Korean stocks for a second month in July while withdrawing funds from the bond market for the first time in five months.

Offshore investors bought a net 2.05 trillion won (US$1.68 billion) worth of local shares last month, the second consecutive month of net buying after 244 billion won (US$200.16 million) in June, according to data from the Financial Supervisory Service (FSS) on Aug. 12.

By country, net purchases by investors from the United States and the Cayman Islands came to 1.25 trillion won (US$1.022 billion) and 1.24 trillion won (US$1.018 billion), respectively. Canada came next with 348 billion won (US$285.48 million), followed by Singapore with 306 billion won (US$251.03 million) and Malaysia with 185 billion won (US$151.76 million).

In contrast, the top net sellers were investors from the United Kingdom with a net sale of 932 billion won (US$764.56 million), followed by the United Arab Emirates with 470 billion won (US$385.56 million) and Australia with 162 billion won (US$132.90 million).

Japanese investors sold a net 55 billion won (US$45.12 million) in July, showing the largest net selling in nine months after 204 billion won (US$167.35 million) in October last year. However, there was no rapid outflow of funds.

As of end-July, foreign investors held 543.27 trillion won (US$445.67 billion) worth of listed South Korean stocks, accounting for 33.5 percent of the total market capitalization. American investors came first with 233.61 trillion won (US$191.64 billion), or 43 percent of the total foreign ownership, followed by British investors with 42.25 trillion won (US$34.66 billion), those from Luxembourg with 34.51 trillion won (US$28.31 billion), or 6.4 percent, and Singapore with 31.14 trillion won (US$25.55 billion), or 5.7 percent. Japanese and Chinese investors held 12.58 trillion won (US$10.32 billion), or 2.3 percent, and 11.09 trillion won (US$9.10 billion), or 2 percent, worth of market capitalization, respectively.

Foreign investors purchased 8.50 trillion won (US$6.97 billion) worth of listed South Korean bonds in July and sold 5.20 trillion won (US$4.27 billion). In addition, 3.70 trillion won (US$3.04 billion) worth of bonds were redeemed at maturity. As a result, the figure showed a net outflow of 400 billion won (US$328.14 million) in the market, ending five straight months of net buying since February.

By region, Europe had the highest amount of net sale with 300 billion won (US$246.10 million), followed by Middle East with 200 billion won (US$164.07 million) and Asia with 30 billion won (US$24.61 million). The Americas showed a net investment of 40 billion won (US$32.81 million).

Foreign investors held 124.20 trillion won (US$101.89 billion) worth of South Korean bonds as of the end of last month, accounting for 6.9 percent of the value of all listed bonds.

By region, Asian investors owned the largest amount of 51.20 trillion won (US$42 billion), taking up 41.3 percent of the total foreign ownership. European investors came next with 44.70 trillion won (US$36.70 billion), or 36 percent, followed by American investors with 11.30 trillion won (US$9.27 billion), or 9.1 percent.