Foreigners Withdraw 5.1 Trillion KRW from Korean Stock Market in August... Bond Investors See Net Inflow of 1.8 Trillion KRW

Bank of Korea 'International Finance, Foreign Exchange Market Trends'

[Asia Economy Reporter Kim Eunbyeol] Last month, foreign investors withdrew more than 5.1 trillion won in stock funds from the Korean stock market.

According to the 'International Finance and Foreign Exchange Market Trends' announced by the Bank of Korea on the 10th, foreign investment funds in domestic stocks recorded a net outflow of 4.45 billion dollars in August. Based on the won-dollar exchange rate at the end of August (1159.5 won), approximately 5.1597 trillion won was withdrawn.

Foreign stock investment funds recorded net outflows for four consecutive months following May (-8.23 billion dollars), June (-440 million dollars), and July (-3.06 billion dollars). The scale of net outflows increased due to concerns over the domestic COVID-19 spread and sluggish semiconductor industry conditions.

On the other hand, foreign bond investment funds recorded a net inflow of 1.56 billion dollars (approximately 1.8088 trillion won). Although this marks eight consecutive months of net inflows, the amount sharply decreased from 5.57 billion dollars in July to August. As a result, the total foreign securities investment funds, combining stocks and bonds, recorded a net outflow of 2.88 billion dollars.

The credit default swap (CDS) premium for the 5-year Korean government bond (Foreign Exchange Stabilization Fund bond) averaged 18 basis points (1bp=0.01 percentage points) last month, remaining the same for three consecutive months. This is lower than the pre-COVID-19 average in 2019 (31bp). CDS is a type of financial derivative product that acts as insurance to compensate 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.