Overseas Korean Retail Investors Boom... Foreign Financial Assets Outside Stocks Reach Record High of $637.9 Billion

[Image source=Yonhap News]

Last year, as overseas stock investments by individual investors such as 'Seohak Gaemi' significantly expanded, South Korea's external financial assets increased to an all-time high.

According to the international investment position released by the Bank of Korea on the 23rd, as of the end of December last year, South Korea's external financial assets (external investments) were recorded at $2,161 billion. This is an increase of $198.2 billion compared to the end of the previous year, marking a record high.

External financial assets refer to the amount invested by domestic investors in overseas financial products or direct investments made by companies abroad. Among external financial assets, residents' securities investments increased by $127 billion, and direct investments rose by $50.6 billion. Yoo Bok-geun, head of the Foreign Investment Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "The increase in external financial assets is due to the rise in equity securities investments within securities investments, as well as the increase in U.S. stock prices."

External financial liabilities (foreigners' domestic investments) stood at $1,523.1 billion at the end of last year, up $26.4 billion from the previous year. This is interpreted as an increase in foreigners' long-term domestic investments. Securities investments increased by $16.2 billion due to the expansion of foreigners' debt securities investments, while direct investments decreased by $1.7 billion.

Net external financial assets (external financial assets minus external financial liabilities), which indicate South Korea's external payment capacity, rose to $637.9 billion, the largest scale ever recorded. This is an increase of $171.8 billion compared to the end of the previous year, the second-highest increase after 2018 ($174.5 billion).

External debt ($628.5 billion) increased by $83.6 billion, and external claims ($1,077.9 billion) increased by $50.2 billion, both reaching record highs. External claims and external debt exclude equity, stocks (including funds), and derivative financial products whose prices are not fixed, from South Korean residents' overseas investments categorized as 'external financial assets' and foreigners' domestic investments categorized as 'external financial liabilities.'

External soundness indicators improved. Last year, the short-term external debt ratio (short-term external debt/reserve assets) and the short-term external debt proportion (short-term external debt/external debt) were 35.9% and 26.4%, respectively, down 0.1 percentage points and 2.8 percentage points from the end of the previous year.

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