Domestic Institutions' Foreign Currency Securities Investment Balance at $326.3 Billion... Second Largest Increase in Stocks Ever

Bank of Korea '2019 Major Institutional Investors' Foreign Securities Investment Trends'
Stock Investment Balance Surpasses 100 Billion USD

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] At the end of last year, the outstanding balance of overseas foreign currency securities investments by major institutional investors in South Korea (based on market value) reached $326.3 billion. On a quarterly basis, this marked the sixth consecutive quarter of growth, largely due to a sharp increase in stock balances driven by favorable global market conditions.

According to the "2019 Trends in Foreign Currency Securities Investments by Major Institutional Investors" released by the Bank of Korea on the 2nd, as of the end of last year, the outstanding balance of overseas foreign currency securities investments by major institutional investors in South Korea (based on market value) was $326.3 billion, an increase of $60.71 billion compared to the end of 2018.

This was due to sustained investment demand for foreign bonds and foreign stocks, centered on asset management companies.

Looking at the balances by institutional investor, asset management companies held $191.04 billion, up $47.52 billion from the previous year, while insurance companies held $87.74 billion, up $5.44 billion from the previous year. In addition, investment balances also increased for foreign exchange banks (+$3.5 billion) and securities companies (+$4.3 billion).

By category, foreign bonds increased by $32.1 billion, foreign stocks by $27.7 billion, and Korean paper by $0.9 billion.

In particular, the annual increase in stocks recorded the second-largest growth ever, following 2007. As major countries' stock prices rose simultaneously last year, investment balances increased significantly. As of the end of last year, the stock investment balance reached $106.72 billion, surpassing $100 billion for the first time.

Last year, the US stock market rose 22.3%, and the European Union (EU) also increased by 24.8%. China (+10.3%) and Japan (+18.2%) showed similar trends.

Bond investments also saw the third-largest increase ever, influenced by major countries' monetary policy easing and interest rate declines.

A Bank of Korea official explained, "The market was very favorable last year, and both stocks and bonds showed positive trends, which significantly increased overseas investment demand."

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