Foreign Investors Sold $2.8 Billion in Stocks in February... "Profit-Taking Sell-Off"

Bank of Korea Announces 'International Finance and Foreign Exchange Market Trends Since February 2021' on the 11th
Foreign Investors Sell $2.8 Billion in Stocks... "Impact on KOSPI Valuation"

On the 2nd, when the KOSPI index started with a sharp rise, the KOSPI was displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] In February, foreign investors withdrew $2.86 billion in stock funds from the domestic market. This appears to be influenced by perceptions of the domestic KOSPI valuation.

According to the "International Finance and Foreign Exchange Market Trends since February 2021" released by the Bank of Korea on the 11th, the net inflow of foreign funds into domestic stocks and bonds in February totaled $6.12 billion.

Foreign investors mainly purchased domestic bonds centered on public funds. The net inflow of bonds recorded $8.99 billion. On the other hand, the net outflow of stocks was $2.86 billion, significantly higher than the previous month ($2.39 billion). This is the largest amount since May 2020 ($3.27 billion). A Bank of Korea official commented on the outflow of funds by foreign investors, stating, "It seems to be influenced by perceptions of the domestic KOSPI valuation," and added, "There was also an aspect of realizing profits."

The CDS premium for the 5-year Korean government bond (Foreign Exchange Stabilization Fund bond) averaged 23 basis points (1bp = 0.01 percentage points) last month, down 2bp from the previous month. The CDS premium is an indicator of default risk, and a decline in the premium means that the default risk has also decreased.

Last month, the average daily foreign exchange transaction volume in the domestic interbank market was $27.88 billion, down $640 million from the previous month ($28.52 billion). This was due to a decrease in spot foreign exchange transactions ($510 million) and foreign exchange swaps ($280 million).

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