Foreign inflows hit 20-month high

SEOUL - Foreign net inflows to Korean financial markets in September rose to a 20-month high, data from the local financial regulator said on Sunday, as a record rise in stock investments offset the biggest decline in bond investments in more than a year.

Foreign net investment in Korean stocks and bonds rose by 5.88 trillion won ($5.49 billion), the Financial Supervisory Service said, on the back of 8.33 trillion won worth of stock purchases - the biggest monthly inflow to the stock market since records started in 2001.

Foreigners extended their net buying streak on the local stock exchanges to 27 consecutive sessions on Friday. Such inflows have also driven up the value of the won, which rose by 3.3 percent against the dollar last month to record its best monthly rise in nearly two years.

This has prompted repeated warnings from the local authorities to slow the currency’s rise amid concerns about eroding price competitiveness for local exporters.

Currency dealers on Friday suspected that local authorities bought somewhere between $500 million to $1 billion worth of dollars in a bid to curb the won’s rise, underscoring policymakers’ wariness about the rapidly appreciating won.

On the other hand, foreigners pulled out 2.45 trillion won from local bonds last month, marking the biggest outflow since August 2012. Foreigners took out 2.55 trillion won from matured debt during the month, the FSS said.

Swiss investors continued to increase their exposure to won-denominated debt, with their net investment in the paper rising by 352 billion won in September.

Investors in China also bought 178 billion won worth of South Korean debt last month, after taking out 130 billion won from the market in August.

Norwegian investors also bought 48 billion won worth of local debt last month.

Reuters