Foreigners Withdraw 500 Billion Won from Korean Stock Market in June... Net Outflow Continues

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] It has been confirmed that foreign investors withdrew about 500 billion won worth of stock funds from the Korean stock market last month.

According to the 'International Finance and Foreign Exchange Market Trends' announced by the Bank of Korea on the 14th, foreign investment funds in domestic stocks recorded a net outflow of 440 million dollars in June. Based on the won-dollar exchange rate at the end of June (1,126 won), approximately 495.4 billion won was withdrawn.

Foreign stock investment funds recorded net outflows for two consecutive months following May (-8.23 billion dollars). However, the scale of net outflow sharply decreased to about 1/20 of the previous month. The Bank of Korea explained the trend in foreign stock funds by stating, "The scale of outflows significantly shrank as concerns over U.S. inflation eased and long-term interest rates fell."

On the other hand, foreign bond investment funds recorded a net inflow of 8.76 billion dollars (approximately 9.8637 trillion won). This marks six consecutive months of net inflows. As a result, the total foreign securities investment funds, combining stocks and bonds, recorded a net inflow of 8.32 billion dollars.

The credit default swap (CDS) premium for the 5-year Korean government bond (Foreign Exchange Stabilization Fund bond) was recorded at an average of 18 basis points (1bp = 0.01 percentage points) last month. This is lower than May's 19bp and significantly lower than the 2019 average of 31bp before the COVID-19 outbreak. CDS is a type of financial derivative product that acts as insurance compensating for losses when the issuing country or company defaults. Generally, if the economic risk of the country increases, the premium also rises.

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