Foreign ownership of Korean stocks falls to six-year low

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,661.28 points on Friday, down 19.04 points from the previous trading day. [YONHAP]

Foreign ownership of Korean stocks fell to a six-year low, bourse data showed Sunday, as overseas investors preferred safer assets in the wake of the Ukraine crisis and ahead of a widely expected U.S. rate hike.

As of Friday, foreign investors held 666 trillion won ($538 billion) worth of local stocks on the main Kospi, accounting for 31.86 percent of the entire 2,091 trillion-won market capitalization, according to the data compiled by the Korea Exchange (KRX).

The foreign ownership shrank to the smallest portion since 31.77 percent on Feb. 11, 2016.

Foreigners' possession of Kospi shares had reached nearly 40 percent in early 2020 before dwindling to 36.5 percent at the end of that year and 33.55 percent at the end of 2021, largely due to the pandemic and the stock rush among retail investors.

This year, the figure jumped to 34.2 percent on Jan. 25 ahead of the initial public offering (IPO) event by battery making behemoth LG Energy Solution, before falling back to the 31 percent range early this week.

Analysts attributed the foreign dumping of local stocks primarily to the uncertainties from Russia's invasion of Ukraine.

The invasion triggered economic sanctions from the United States and its allies, which turned investors risk-averse and appreciated the U.S. dollar against the local currency.

Yonhap