Expectations for US-China Phase One Deal, Semiconductor Improvement... Net Inflow of Foreign Stock Funds in December

Bond funds outflow decreased compared to the previous month

KRW-USD exchange rate declined

[Image source=Yonhap News]

[Asia Economy Reporter Shim Nayoung] Foreign investors' equity funds turned to net inflow due to expectations of the US-China Phase One trade agreement and improvements in the semiconductor industry. Although bond funds experienced outflows, the scale of outflow decreased compared to the previous month.

According to the "International Finance and Foreign Exchange Market Trends since December 2019" released by the Bank of Korea on the 10th, foreign equity funds recorded a net inflow of $660 million last month, escaping net outflow for the first time in five months. In November alone, equity funds had a net outflow of $2.44 billion.

Bond funds experienced outflows centered on public funds due to a large-scale maturity of $5.53 billion in December last year, but the total outflow was -$930 million, a decrease in scale compared to the previous month (-$1.52 billion).

Combined foreign securities investment funds, including stocks and bonds, recorded a net outflow of $270 million.

In the foreign exchange market, the KRW-USD exchange rate declined. It fell from 1,181.2 KRW at the end of November to 1,156.4 KRW at the end of December, then slightly rose to 1,170.8 KRW on January 8. The decline was driven by expectations of the US-China Phase One trade agreement, easing concerns over a no-deal Brexit, and risk appetite following the Federal Open Market Committee (FOMC) results favoring somewhat accommodative monetary policy. However, the decline narrowed as geopolitical risks emerged due to clashes between the US and Iran after the beginning of the year.

Volatility of the KRW-USD exchange rate expanded compared to the previous month. The range increased from 3.6 KRW in November last year to 3.7 KRW in December, and the volatility rate rose from 0.31% to 0.32%.

This content was produced with the assistance of AI translation services.