Surge in Securities Investment... Last Year's Net External Financial Assets Reach Record High

As the USD-KRW exchange rate surpassed 1,340 won early in the trading session, an employee is organizing dollars at the Counterfeit Response Center of Hana Bank in Jung-gu, Seoul on the 17th. Photo by Jinhyung Kang aymsdream@

Last year, due to a boom in domestic and overseas securities investments, South Korea's net external financial assets reached an all-time high at the end of last year. The proportion of short-term external debt, an indicator of soundness, also recorded its lowest level since statistics compilation began in 1994.

According to the "2023 International Investment Position (Provisional)" released by the Bank of Korea on the 27th, South Korea's net external financial assets stood at $779.9 billion at the end of last year, an increase of $8.5 billion from $771.3 billion at the end of the previous year.

Net external financial assets are calculated by subtracting "external financial liabilities," which represent foreign investment in the domestic market, from "external financial assets," which represent overseas investments by domestic residents.

As of the end of last year, external financial assets reached $2.2871 trillion, supported by the expansion of residents' securities investments such as stocks and bonds and the rise in global stock prices. This is an increase of $118.4 billion compared to the end of the previous year.

External financial liabilities recorded $1.5072 trillion, up $109.9 billion from the end of the previous year, due to an increase in foreign securities investments.

Park Seong-gon, head of the Overseas Investment Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "In 2022, South Korea's external financial assets and liabilities turned downward due to sluggish global and domestic stock markets and depreciation of major currencies and the Korean won. However, in 2023, with the rebound of global and domestic stock prices, investments by residents and foreigners continued, leading to an increase."

The ratio of short-term external debt to total external debt, an indicator of external debt soundness, stood at 20.5%, down 4.5 percentage points from 25.0% at the end of the previous year. This marks the third consecutive year of decline since 2020's 29.1%, reaching the lowest level since statistics compilation began in 1994. The short-term external debt ratio to reserve assets, which indicates external payment capacity, was 32.4%, down 6.9 percentage points from 39.3% at the end of the previous year.

External claims, including the central bank's reserve assets ($1.0278 trillion), decreased by $3 billion compared to the end of the previous year, resulting in a total of $1.0278 trillion, an increase of $6.1 billion from the previous year-end.

External liabilities recorded $663.6 billion, down $1.6 billion from the end of the previous year, as short-term external debt decreased by $30.3 billion while long-term external debt increased by $28.7 billion.

Park said, "Currently, South Korea's external soundness is at a favorable level," but added, "It is necessary to carefully monitor domestic and international macroeconomic and foreign exchange market conditions."

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