Net Inflow of Securities Investment Funds in September... Foreign Investors Returned After a Month

Bank of Korea Announces 'International Finance and Foreign Exchange Market Trends' on the 14th
Foreign Currency Bonds CDS Premium at 18bp for 4 Months... Maintaining Low Level

[Asia Economy Reporter Jang Sehee] In September, foreign investment funds in domestic securities turned to net inflow. Bond funds showed net inflows in both public and private sectors, with the inflow scale expanding compared to the previous month.

According to the 'International Finance and Foreign Exchange Market Trends' released by the Bank of Korea on the 14th, foreign investment funds in domestic stocks recorded a net inflow of $2.42 billion in September.

Foreign stock investment funds had recorded net outflows for four consecutive months following May (-$8.23 billion), June (-$440 million), July (-$3.06 billion), and August (-$4.45 billion), before turning to net inflow.

On the other hand, foreign bond investment funds recorded a net inflow of $4.6 billion. The net inflow increased by $3.04 billion compared to August ($1.56 billion).

With both stock and bond investment funds flowing in, the total foreign securities investment funds saw a significant net inflow of $7.01 billion.

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 point) last month, remaining the same for four consecutive months. This level is lower than the pre-COVID-19 average in 2019 (31bp).

CDS is a type of financial derivative product that acts like 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.