Foreigners buy Korean shares worth $16.5B in 2012

Foreign investors turned to net buyers of Korean shares last year, scooping up a net 17.6 trillion won ($16.5 billion), led by a global liquidity gush, the financial regulator said yesterday.

The amount of their net stock purchase hit a monthly record of 6.6 trillion won in August, the Financial Supervisory Service (FSS) said. The previous record was 5.5 trillion won tallied in April 2010. In 2011, they offloaded a net 9.6 trillion won.

The amount of their stock holdings reached 411.6 trillion won as of the end of December, with their portion to the total market cap coming to 32.2 percent, up from 30.4 percent a year ago.

Asset purchase programs in the debt-mired euro zone, along with monetary easing measures led by the U.S. Federal Reserve, prompted investors to increase their bets in the local equity market, the FSS noted.

The regulator, however, also pointed out such inflows of foreign money contributed in part to making the local stock market more susceptible to external shocks.

The Seoul bourse tumbled 6.6 percent in the April-July period when the euro zone debt crisis worsened on Greece default concerns, after a 10.3 percent rally was seen in the previous three months, FSS data showed.

European investors had a buying spree of a net 9.9 trillion won last year, from the 15.1 trillion won sell-off. France scooped up the largest with 3.3 trillion won, followed by Britain with 3.1 trillion won and Norway with 1.3 trillion won.

In contrast, U.S. investors retreated from Seoul markets, with their net purchase falling sharply from 5.2 trillion won to 1 trillion won over the cited period.

Foreigners invested a net 38 trillion won in local bonds last year, on the back of Korea’s relatively sound economic fundamentals and sovereign rating upgrades on the country by global credit appraisers. The total amount of their bond holdings rose 6.9 percent on-year to 91 trillion won as of the end of December, according to the regulator.

Yonhap