Last Month, Foreign Investors' Net Inflow into Domestic Securities Reaches 15 Trillion Won... Record High

Bonds Purchased Worth 8.96 Billion Dollars

Last month, foreign investment funds in domestic securities increased significantly by more than 15 trillion won.

According to the 'International Finance and Foreign Exchange Market Trends' released by the Bank of Korea on the 12th, foreign securities investment funds in May recorded a net inflow of 11.43 billion dollars, marking an all-time high.

This means that the funds flowing into the Korean securities market far exceeded the funds flowing out.

Based on the won-dollar exchange rate at the end of May (1,327.2 won), this amounts to approximately 15.16761 trillion won.

Among this, foreign investment funds in domestic stocks recorded a net inflow of 2.48 billion dollars.

Foreign investment funds in domestic stocks had recorded net inflows for five consecutive months from October last year to February this year, then experienced a net outflow in March (-1.73 billion dollars), but switched back to net inflow in April and continued the net inflow in May.

The Bank of Korea explained, "Expectations for improvement in the semiconductor industry and the resolution of the US debt ceiling negotiations contributed to the expansion of net inflows."

Last month, foreign investment funds in domestic bonds recorded a net inflow of 8.96 billion dollars, the highest since February 2021 (8.99 billion dollars).

Foreign investment funds in domestic bonds showed net outflows of 5.29 billion dollars in January and 520 million dollars in February this year, but have shown net inflows in March (1.81 billion dollars), April (2.33 billion dollars), and May.

The Bank of Korea stated, "Bond funds saw a large net inflow mainly in public funds due to the increase in foreign exchange reserves of major domestic bond investing countries and continued arbitrage incentives."

The credit default swap (CDS) premium for Korean government bonds (based on the 5-year Foreign Exchange Stabilization Fund bonds) averaged 43 basis points (1bp = 0.01 percentage points) last month, down 2bp from April (45bp).

CDS is a type of financial derivative 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.

[Image source=Yonhap News]

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