"AI Investment Sentiment" Drives Foreign Net Inflow into Stock Market in October... Bonds Turn to Net Outflow

$2.29 Billion in Net Foreign Inflows to Domestic Securities Market in October
$3.02 Billion Net Inflow to Stocks
Sustained AI Investment Sentiment, but Inflow Scale Shrinks
Bonds See $720 Million Net Outflow
Public Funds Lead Short-Term Bond Selling

Foreign capital continued to flow into the domestic securities market for the second consecutive month. However, the scale of net inflows decreased due to profit-taking following stock price increases and selling pressure on short-term bonds.

Various indices and exchange rates are displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul.

According to the "Trends in International Financial and Foreign Exchange Markets after October 2025" released by the Bank of Korea on November 13, there was a net inflow of $2.29 billion in foreign capital into the domestic stock and bond markets last month. Although the net inflow trend continued for a second month, the scale was smaller than the previous month's $9.12 billion.

Stock funds saw a net inflow of $3.02 billion. A Bank of Korea official explained, "There has been a net inflow for six consecutive months, driven by sustained global investment sentiment in artificial intelligence (AI)," but added, "The pace of inflows has slowed due to profit-taking following stock price increases." Bond funds, on the other hand, shifted to a net outflow of $720 million, mainly due to continued selling of short-term bonds by public funds.

The won-dollar exchange rate rose to 1,424.4 won at the end of October, up from 1,402.9 won at the end of September. The Bank of Korea official noted, "The significant increase was influenced by the strengthening of the US dollar following the hawkish outcome of the Federal Open Market Committee (FOMC), the weakening of the yen due to changes in fiscal and monetary policy expectations after the launch of the Takaiichi Cabinet in Japan, and continued overseas securities investment by residents."

The US policy rate cut in October was in line with market expectations. However, subsequent comments by Jerome Powell, Chair of the US Federal Reserve, that "a December rate cut has not been decided," along with the presence of dissenting opinions favoring a rate hold, were interpreted as hawkish signals. The expansion of fiscal spending following the launch of the Takaiichi Cabinet in Japan, as well as expectations that the Bank of Japan (BOJ) would maintain its accommodative monetary policy stance, also played a role.

The daily volatility of the won-dollar exchange rate in October was 0.39%, higher than the 0.28% recorded in September. Since the beginning of this month, the won-dollar exchange rate has continued to rise, reaching 1,465.7 won as of November 12.

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