Foreigners Selling Stocks and Buying Bonds for 4 Months... Bond Holdings Reach Record High of 143 Trillion Won

[Asia Economy Reporter Eunmo Koo] Due to the impact of the novel coronavirus infection (COVID-19), the preference for safe assets has continued, leading foreign investors to sell stocks and buy bonds in the domestic securities market for four consecutive months. As foreign investors continued net purchases of domestic listed bonds, their bond holdings exceeded 143 trillion won, setting a new record high.

According to the 'May Foreign Securities Investment Trends' announced by the Financial Supervisory Service on the 8th, foreign investors net sold listed stocks worth 4.062 trillion won last month and made net investments of 2.821 trillion won in listed bonds. As a result, as of the end of last month, foreign investors held a total of 663.6 trillion won in listed securities, including 520.6 trillion won in listed stocks (30.9% of market capitalization) and 143.1 trillion won in listed bonds (7.3% of outstanding bonds).

In the listed bond market last month, foreign investors made net purchases of bonds worth 6.294 trillion won. Despite bond maturities amounting to 3.473 trillion won, net investments totaled 2.821 trillion won. This marked the fifth consecutive month of net investment flow since January. With the continuation of the net investment trend, foreign investors' domestic bond holdings increased by 2.6 trillion won from the previous month to 143.1 trillion won as of the end of May, setting a new record high. Compared to the end of last year (123.651 trillion won), this represents an increase of 19.399 trillion won (15.7%).

By region, Asia and the Americas made net investments of 1.8 trillion won and 400 billion won respectively, while Europe and the Middle East saw net withdrawals of 900 billion won and 20 billion won respectively. In terms of holdings, Asia accounted for the largest share with 65.7 trillion won, representing 45.9% of total foreign investment, followed by Europe (45.8 trillion won, 32.0%) and the Americas (11.2 trillion won, 7.8%).

By bond type, net investments were mainly in government bonds (2.4 trillion won), with government bonds accounting for the majority (80.0%) of holdings at 114.4 trillion won. Special bonds recorded 28.6 trillion won (20.0%). By remaining maturity, net investments were made across all categories: over 5 years (1.1 trillion won), 1 to less than 5 years (900 billion won), and less than 1 year (800 billion won). Holdings were highest in bonds with 1 to less than 5 years maturity at 53.4 trillion won (37.3%), followed by over 5 years (45.4 trillion won) and less than 1 year (44.3 trillion won).

On the other hand, in the domestic listed stock market, foreign investors continued to sell. Last month, they net sold domestic listed stocks worth a total of 4.062 trillion won, including 3.602 trillion won in the KOSPI market and 441 billion won in the KOSDAQ market, continuing four consecutive months of net selling since turning negative in February (3.225 trillion won).

By region, the Middle East and Asia made net purchases of 200 billion won and 40 billion won respectively, but the U.S. and Europe made net sales of 1.8 trillion won and 1.2 trillion won respectively. By country, Saudi Arabia (600 billion won), China (300 billion won), and Norway (100 billion won) made net purchases, while the U.S. (1.8 trillion won) and the U.K. (700 billion won) made net sales.

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