Q1 Institutional Investors' Overseas Securities Investment Drops Most in Over 9 Years

Q1 Institutional Investors' Overseas Foreign Currency Securities Investment Balance Drops by $9.6 Billion
Largest Decline Since Q3 2011

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] The outstanding balance of overseas foreign currency securities investments by domestic institutional investors has decreased at the largest rate in about nine years.

According to the Bank of Korea on the 1st, as of the end of March 2020, the outstanding balance of overseas foreign currency securities investments (market value basis) by major institutional investors was $317.8 billion, down $9.6 billion (2.9%) compared to the end of last year. In terms of quarterly decrease, this is the largest decline since the third quarter of 2011 (-$11.15 billion).

Jo Beomjun, Deputy Head of the Capital Movement Analysis Team at the Bank of Korea's International Department, explained, "The spread of the novel coronavirus disease (COVID-19) caused stock prices in major countries to fall, and overseas securities investment demand decreased, which mainly affected this decline." In the third quarter of 2011, foreign currency securities investments sharply declined due to the Eurozone (19 countries using the euro) debt crisis.

By institution in the first quarter, asset management companies' investments decreased by $7.31 billion, and investments by insurance companies (-$2.32 billion) and securities companies (-$100 million) also declined.

By product, investments in foreign stocks (-$5.1 billion) and foreign bonds (-$4.9 billion) both decreased. On the other hand, Korean paper (foreign currency-denominated securities issued overseas by domestic financial institutions or companies) investments increased by $500 million.

A Bank of Korea official stated, "Stock investments decreased due to the decline in stock prices in major countries, and bond investments decreased due to the reduction in the proportion of overseas bond holdings."

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