In the first quarter, South Korea's major institutional investors saw their foreign securities investments decrease by more than $4.2 billion.
According to a report released by the Bank of Korea on June 1, the balance of foreign securities investments by institutional investors stood at $503.33 billion as of the end of March, down $4.26 billion from the previous quarter.
This decline was attributed to stock market adjustments due to the ongoing conflict in the Middle East and rising U.S. Treasury yields, which resulted in greater valuation losses than net investments in foreign stocks and bonds.
During the first quarter, the global financial market experienced a sharp decline in risk appetite due to the Middle East conflict. Notably, the rise in U.S. Treasury yields contributed to falling bond prices and weakened emerging market currencies, negatively impacting the value of domestic institutional investors' overseas portfolios.
By investment type, asset management companies reported a decrease of $4.75 billion, securities firms saw a drop of $400 million, and insurance companies lost $40 million, while foreign exchange banks increased their balances by $930 million.
In terms of products, foreign stocks saw the largest decline, with a balance reduction of $4.01 billion. Foreign bonds decreased by $450 million. Conversely, investments in Korean Paper (KP), foreign currency-denominated securities issued abroad, increased by $200 million, primarily driven by foreign exchange banks.
Although foreign stocks experienced an influx of bargain-buying due to price adjustments from the Middle East conflict, the valuation losses were more significant. In the first quarter, the S&P 500 index fell by 4.6%.
* This article has been translated by AI.
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