Foreign buying of shares, bonds hit high last month

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Foreign buying of shares, bonds hit high last month

Foreign investors scooped up a net 5 trillion won ($4.6 billion) worth of Korean stocks and bonds in February and total foreign holdings of Korean securities and bonds hit a record high on a month-end basis, the Financial Supervisory Service said yesterday.

Of the 5 trillion won, foreign investors bought a net 1.5 trillion won worth of listed stocks and scooped up a net 3.5 trillion won worth of listed bonds in February.

According to the financial watchdog, until the beginning of February, foreign investors were selling Korean stocks on worries over volatile foreign exchange rates and North Korea’s nuclear tests.

Beginning in the middle of the month, however, global investors began snapping up Korean stocks on improved economic indicators and expectations of stability in the foreign exchange market, it said.

The Kospi index edged up 3.3 percent in February after slipping 1.8 percent in January.

As of the end of February, foreigners held 421.2 trillion won in listed stocks, up 18.2 trillion won from a month earlier, hitting a fresh high, while controlling 32.2 percent of the total market capitalization.

They held 93.7 trillion won in listed bonds, up 3.6 trillion won from a month earlier, also hitting a fresh high on a month-end basis. Foreigners controlled 7.1 percent of total listed bonds.

Americans held the largest portion of Korean stocks worth 165.1 trillion won, or 39.2 percent of total foreign holdings of Korean stocks, followed by England (40.7 trillion won) and Luxembourg (27.4 trillion won).

The entire euro zone’s ownership of Korean stocks stood at 131 trillion won in February. China, which owns 8.8 trillion won of Korean stocks, accounted for 1.9 percent of the stocks held by foreigners.

The FSS noted that foreign investors’ investing a net 3.5 trillion won in Korean bonds is the largest inflow since October 2010, which recorded 4.3 trillion won.

The top three owners of Korean bonds are the U.S. (19.4 trillion won), Luxembourg (14.8 trillion won) and China (11.2 trillion won).

Growing expectations for a strong won and the possibility of interest rate cuts by the Bank of Korea are major factors that drove foreign investors to buy Korean bonds, the FSS said in a statement.

The central bank kept the key interest rate at 2.75 percent in February after a cut it in October.

The BOK’s Monetary Policy Committee will meet on March 14 again to decide the key rate.

By Kim Mi-ju []
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