Foreigners snapping up gov’t bonds

The amount of Korean government bonds owned by foreigners climbed to a fresh high as Asian investors beefed up their holdings of the relatively safe asset, data showed yesterday.

Overseas investors’ holdings of listed government bonds reached 63.06 trillion won ($55.9 billion), or 16 percent of total government bond ownership, as of the end of November, according to the data by the Financial Supervisory Service and the Korea Financial Investment Association.

The figure marks the highest level since the bond market was opened to foreigners in 1998.

Foreign ownership of Korean government bonds has been trending higher since the global financial crisis. After reaching 9.2 percent at the end of 2007, the figure topped 13.3 percent at the end of last year, according to the data.

The growth was largely powered by investors from China and Malaysia, who purchased local government bonds for the 11th straight month this year.

Chinese investors’ purchases of Korean government bonds have sharply increased over the last few years. Their holdings reached 6.57 trillion won as of end-2010, growing nearly 83 times from 79.6 billion at the end of 2008.

Malaysian investors’ government bond ownership stood at 4.28 trillion won at the end of last year, skyrocketing nearly 126 times over the cited period, according to the data.

As of the end of November, U.S. investors were the biggest holders of Korean governments bonds worth around 18.84 trillion won, followed by investors from Luxembourg with 14.15 trillion won and Thai investors with 10.94 trillion won, the data showed.

Yonhap