Foreign Securities Investment Shows Net Inflow After Three Months... "Slowdown in Public Fund Outflow"

The KOSPI index opened the session at 2,395.45, down 23.64 points (0.98%) from the previous trading day. Dealers are busy moving around in the Hana Bank dealing room in Jung-gu, Seoul on the 10th. The KOSPI fell below the 2,400 mark during the session for the first time in eight trading days since the 27th of last month (2,383.76). Photo by Dongju Yoon doso7@

Foreign investment funds in domestic securities turned to a net inflow after three months.

According to the international finance and foreign exchange market trends data released by the Bank of Korea on the 10th, foreign securities investment funds recorded a net inflow of 180 million dollars last month.

There were net outflows of 2.42 billion dollars in December last year and 340 million dollars in January this year, but it turned to a slight net inflow after three months.

Specifically, foreign equity funds showed a net inflow of 700 million dollars. Due to expectations of a recovery in the Chinese economy and other factors, the net inflow continued, but the scale of inflow significantly decreased compared to the previous month (4.95 billion dollars).

On the other hand, foreign bond funds saw a significant reduction in net outflow from 5.29 billion dollars in the previous month to 520 million dollars, due to a slowdown in the outflow of public funds and the inflow of investment funds from some institutions driven by increased arbitrage incentives.

According to the Bank of Korea, foreign bond funds generally showed net inflows last year but experienced large net outflows starting in December. The net outflow of 5.29 billion dollars in January this year was the largest monthly amount on record. Because of this, some analysts suggested that the interest rate inversion between Korea and the U.S. influenced the outflow of bond funds.

(Data provided by Bank of Korea)

The won-dollar exchange rate rose to 1,321.4 won as of the 8th of this month. This was due to stronger dollar trends as U.S. employment and inflation indices exceeded expectations, increasing the likelihood of the Federal Reserve (Fed) raising its terminal interest rate. The daily change rate of the won-dollar exchange rate in February was 0.62%, up from 0.32% in the previous month.

The average daily foreign exchange transaction volume in the domestic interbank market in February was 32.6 billion dollars, an increase of 900 million dollars compared to 31.7 billion dollars in the previous month. Spot foreign exchange and foreign exchange swap transactions increased by 1.53 billion dollars and 130 million dollars, respectively.

The foreign exchange stabilization bond (Oe-pyeong-chae) CDS premium was 42 basis points in February, down from 44 basis points in the previous month. The external borrowing spread for short-term maturities under one year was 3 basis points, up from -2 basis points in the previous month. Medium- to long-term spreads also rose to 62 basis points from 49 basis points in the previous month. However, these levels remain low.

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