Foreign net buys in stocks and bonds increase in October

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Foreign net buys in stocks and bonds increase in October

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For the first time in five months foreign investors’ net purchases of stocks and bonds in October increased thanks to eased uncertainties in the Chinese market.

According to the Financial Supervisory Service on Tuesday, foreign investors last month net purchased 584 billion won ($499 billion) worth of stock, resulting in outstanding equities owned by foreigners of 441.8 trillion won.

Foreign investors now own 29.3 percent of stocks traded on the Korean markets. This is a slight increase from the previous month when they accounted for 28.6 percent.

The net purchases of stocks by foreign investors were a sharp turnaround from the 1.8 trillion won net selling made in the previous month. Foreign investors have been offloading their holdings since June when the Chinese stock market started to plummet, which was compared to the stock market crash in Wall Street in 1929 and 2000.

After reaching this year’s high at 5,166.35 on June 12, the Shanghai Composite Index started to tumble, and by Aug. 26 it fell to 2,927.29 on Aug. 26, more than a 40 percent drop.

Until the Chinese stock market started to stabilize in late August, foreign investors had been selling off their stocks in the Korean market. The net selling of stocks by foreign investors reached its height at nearly 4 trillion won in August.

Among the biggest buyers of Korean stocks were Singaporeans who net purchased 1 trillion won worth of Korean stock. The net purchase by Singaporeans was a 300 percent increase from 263.3 billion won in September when they were the second biggest foreign investors after Americans with 393.3 billion won. Last month the Swiss were the second biggest foreigners who net bought Korean stocks at 436.7 billion won, followed by the Irish with 338.6 billion won.

Net sellers last month were Saudi Arabians who offloaded nearly 1.9 trillion won worth of stocks. Saudis were also the biggest net sellers in September as they sold off 946.3 billion won worth of stocks.

Americans still hold the largest amount of Korean stocks or 40.1 percent at 177.3 trillion won. British investors are the second-largest holders with 35.5 percent or 8 percent. Europe overall accounts for 28.2 percent or 124.5 trillion won.

Last month foreign investors also made net purchase of Korean bonds for the first time in five months. They bought 110 billion won worth of bonds, a turnaround from the net selling of bonds worth 937 billion won. Foreign investors currently own 101.9 trillion won worth of Korean bonds, which accounts for 6.6 percent.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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