Foreign investors’ holdings of South Korean bonds have fallen to a six-month low.
Foreign investors held 122.30 trillion won worth of bonds as of Dec. 4, according to the Fiancial Supervisory Service. The figure represented a 2.47 trillion won drop from 124.77 trillion won at end-November and the lowest level since the 122.56 trillion won recorded on June 20.
Foreign investors continued to net sell Korea Treasury Bond (KTB) futures. They net sold three-year KTB futures for four consecutive months from August to November this year, with cumulative net selling totaling 97.6 billion won. They also net sold a total of 54.1 billion won worth of 10-year KTB futures (LKTBF) for three months from September to November this year. However, some market experts note that the continued net selling does not necessarily mean that foreign investors are leaving the Korean bond market.
Bond investors often reinvest in bonds with the funds they have recovered at maturity, and, depending on the circumstances, they may want to delay their reinvestment. In other words, it may be too early to say that foreign investors are exiting the local bond market on the basis of the short-term movement of funds.