Foreigners Net Buy 6 Trillion KRW of Korean Stocks in November Amid Weak Dollar... Largest in 7 Years 2 Months

[Asia Economy Reporter Koo Eun-mo] As the US dollar weakened and expectations for economic recovery improved investor sentiment, foreign investors last month made the largest net purchases of domestic listed stocks in 7 years and 2 months.

According to the "November Foreign Securities Investment Trends" announced by the Financial Supervisory Service on the 7th, foreign investors last month made net purchases of 6.125 trillion KRW worth of domestic listed stocks and net redemptions of 913 billion KRW worth of listed bonds, resulting in a total net investment of 5.212 trillion KRW. As of the end of last month, foreigners held a total of 825.4 trillion KRW in listed securities, including 675.2 trillion KRW (30.8% of market capitalization) in listed stocks and 150.2 trillion KRW (7.3% of outstanding amount) in listed bonds.

Last month, foreigners made net purchases of listed stocks worth 5.857 trillion KRW in the KOSPI market and 268 billion KRW in the KOSDAQ market, totaling 6.125 trillion KRW. This is the largest monthly net purchase by foreign investors in 7 years and 2 months since September 2013 (about 8.3 trillion KRW). This is attributed to improved investor sentiment due to the weakening of the US dollar and expectations for global economic recovery.

By region, net purchases were made in Europe (4.5 trillion KRW), the Americas (1.4 trillion KRW), and the Middle East (80 billion KRW). By country, net purchases were made in the UK (2.2 trillion KRW) and the US (1 trillion KRW), while net sales occurred in Japan (600 billion KRW) and the United Arab Emirates (300 billion KRW). In terms of holdings, the US had the largest amount at 279.4 trillion KRW, accounting for 41.4% of total foreign investment, followed by Europe (206.1 trillion KRW, 30.5%) and Asia (89.2 trillion KRW, 13.2%).

Foreign investment in domestic bonds turned to net redemption after one month. Last month, foreign investors made net purchases of 2.649 trillion KRW worth of domestic listed bonds in the bond market, but with 3.561 trillion KRW maturing, the total net redemption amounted to 913 billion KRW. Due to deteriorating conditions for currency hedging, the incentive for arbitrage decreased, and reinvestment slowed after maturity redemptions.

By region, net investments were made in Asia (2.3 trillion KRW) and the Americas (200 billion KRW), while net redemptions occurred in Europe (2.2 trillion KRW) and the Middle East (300 billion KRW). In terms of holdings, Asia had the largest amount at 73.3 trillion KRW, accounting for 48.8% of total foreign investment, followed by Europe (44.4 trillion KRW, 29.5%) and the Americas (12.7 trillion KRW, 8.5%).

By bond type, net investment was made in government bonds (400 billion KRW), while net redemptions occurred in Monetary Stabilization Bonds (1.7 trillion KRW). The outstanding balance was dominated by government bonds at 121.7 trillion KRW, accounting for 81.0%, and special bonds recorded 28.4 trillion KRW (18.9%). By remaining maturity, net investments were made in bonds with 1 to less than 5 years (4.2 trillion KRW) and over 5 years (600 billion KRW), while net redemptions occurred in bonds with less than 1 year (5.7 trillion KRW).

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