Foreigners' Korean stock selling spree continues while holding record high debt in Aug

[Graphics by Song Ji-yoon]

Foreign investors’ selling spree of South Korean stocks accelerated last month, while their appetite for the country’s debts remained insatiable with their debt holding hitting a fresh record.

According to the Financial Supervisory Service on Monday, offshore investors net sold 7.82 trillion won ($6.66 billion) worth of Korean shares in August, keeping up their stock selling spree for four consecutive months. They dumped 8.1 trillion won worth equities on the main Kospi while purchasing 283 billion won worth on the secondary Kosdaq. Their net sale in August more than doubled from a month earlier.

Cross-border investors’ Korean stock sale has continued throughout this year except in April. Investors from the United Kingdom sold off 1.3 trillion won worth, and those from the United States 1.3 trillion won worth.

Foreign holdings in Korean stocks reached 797.9 trillion won as of the end of August, losing 13.1 trillion won from the previous month to take up 28.9 percent of the total market capitalization.

Americans held the largest amount of Korean shares worth 325.8 trillion won, accounting for 40.8 percent of the total foreign ownership. They were followed by Europeans with 250.1 trillion won (31.3 percent), Asians with 102.8 trillion won (12.9 percent), and investors from the Middle East with 28.9 trillion won (3.6 percent).

[Source: Financial Supervisory Service]

In the bond market, offshore investors kept up avid appetite for Korean debts in August for eight straight months. They gobbled up 7.33 trillion won worth local bonds and repaid matured bonds worth 5.64 trillion won. Their net investment in local bonds thus amounted to 1.69 trillion won in August.

Foreign ownership of the country’s debts rose to a new record 197.1 trillion won as of the end of last month.

Investors from Asia held 91.2 trillion won in Korean bonds, or 46.3 percent of the total foreign bond ownership. Investors from Europe held 57.3 trillion won worth (29.1 percent), and Americans 18.6 trillion won (9.9 percent).

They invested 1.5 trillion won in Korean government bonds and redeemed 700 billion won from holdings in forex stabilization bonds. By maturity, foreigners held 91.7 trillion won in bonds dated from one year to less than five years, 53.8 trillion won in bonds dated five years and longer, and 51.6 trillion won in bonds dated less than a year.

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