"Stock Prices Rise Despite COVID-19"…Institutional Overseas Investment Increases by $18.5 Billion

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Despite the COVID-19 pandemic, the international financial market showed signs of recovery, leading to a $18.5 billion increase in overseas foreign currency securities investments by domestic institutional investors in the second quarter.

According to the "Second Quarter Trends in Foreign Currency Securities Investments by Major Institutional Investors" released by the Bank of Korea on the 31st, as of the end of June, the total balance of overseas foreign currency securities investments (market value basis) by major institutional investors such as asset management companies, insurance companies, foreign exchange banks, and insurance companies was $336.4 billion. This represents an increase of $18.5 billion (5.8%) compared to the end of March ($317.9 billion).

By investor type, the investment balances increased for asset management companies (+$16.9 billion), foreign exchange banks (+$1.9 billion), and securities companies (+$700 million). In contrast, insurance companies saw a decrease of $1.1 billion.

By product type, foreign stock holdings saw a significant increase as stock investments rose sharply. This was due to a global trend of rising stock prices, which either increased the value of stocks held by institutions or led institutions to increase stock purchases. As of the end of June, the balance of foreign stocks was $115.17 billion, up $12.88 billion from the previous quarter. In fact, stock prices in the United States, the European Union (EU), and Japan rose by 17.8%, 16%, and 17.8% respectively in the second quarter.

Additionally, foreign bonds increased by $5.5 billion, and foreign currency-denominated securities issued abroad by domestic financial institutions or companies (Korean Paper) also rose by $100 million. Bond investments increased due to factors such as interest rate declines resulting from accommodative monetary policies in major countries.

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