Institutional Overseas Securities Investment Balance Down 5.8%... Impact of Stock Price Decline

$373.6 Billion as of End of Q2... Largest Decrease in 10 Years and 9 Months

On the 17th (local time), traders are handling their tasks on the trading floor of the New York Stock Exchange (NYSE) in the United States. [Image source=Yonhap News]

The foreign currency securities investment balance of institutional investors such as foreign exchange banks, asset management companies, securities, and insurance companies in South Korea decreased by 5.8% in the second quarter. As the U.S. Federal Reserve (Fed) tightened monetary policy and stock prices fell, the foreign currency securities investment balance shrank at the largest rate in 10 years and 9 months.

According to the trend of foreign currency securities investment by major institutional investors in the second quarter published by the Bank of Korea on the 1st, the foreign currency securities investment balance of institutional investors at the end of June was $373.62 billion based on market valuation, down $22.83 billion (5.8%) compared to the first quarter.

This is the largest decline since the third quarter of 2011 (-17.5%).

Although net investment increased due to the rise in overseas fund subscriptions by asset management companies, the balance significantly decreased due to valuation losses caused by rising global bond yields and falling stock prices.

By type of institutional investor, asset management companies (-$16.81 billion), insurance companies (-$5.96 billion), and securities companies (-$1.68 billion) decreased, while foreign exchange banks increased by $1.62 billion.

By product, foreign bonds (-$10.62 billion), foreign stocks (-$9.85 billion), and foreign currency-denominated securities (Korean paper, -$2.36 billion) decreased in that order.

Foreign bonds declined due to valuation losses caused by rising global bond yields, and foreign stocks decreased mainly among asset management companies (-$9.48 billion) and securities companies (-$260 million) due to valuation losses from falling stock prices in major countries.

Korean paper issued abroad by domestic financial institutions or companies decreased mainly among insurance companies (-$1.07 billion) due to valuation losses from rising interest rates combined with some insurance companies selling bonds.

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