Foreigners hold record-high Korea debt as of April, shift to net buy in stocks

Foreigners’ holding in Korean debt reached all-time high in April from unfazed buying spree while their stock position turned longer amid signs of stronger-than-expected corporate and economic performance.

[Photo by Yonhap]

According to the Financial Supervisory Service (FSS) on Friday, offshore investors stayed net buyers of Korean debts for the fourth straight month in April, purchasing a net 3.34 trillion won ($3 billion) for the month. They newly bought 8.8 trillion won and 5.4 trillion won of their holdings matured.

Their cumulative net purchases of local bonds came to 22.6 trillion won as of April, pushing foreign holdings to a new record high of 174 trillion won, or 3.1 trillion won higher from a month ago.

Their purchase largely concentrated on government debt - 2.2 trillion won in sovereignty bonds and redeeming 300 billion won from monetary stabilization bonds.

Asians held the largest 8.8 trillion worth of bonds, taking up 39 percent of the total foreign ownership, Europeans 6.6 trillion won (29 percent) and investors from the Middle East 2.5 trillion won (11 percent).

[Source: Financial Supervisory Service]

By maturity, offshore investors purchased a net 13 trillion won worth of bonds dated from one year to less than three years in the January-April period, sharply up from 4 trillion won in the previous year.

Korean treasuries pose appealing as they yield higher than sovereign papers of Hong Kong, Taiwan, U.K. and France of the same AA rating, the FSS observed.

Foreigners who had been net sellers since December shifted to net buying in Korea stocks in April, purchasing a net 672 billion won.

Foreign holdings in Korean stocks reached 882.4 trillion won as of the end of April, gaining 17.2 trillion won against the previous month to take up 30.8 percent of the total market capitalization.

For the January-April period, foreigners net sold a combined 9.3 trillion won worth of local stocks.

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