Last month, foreign investors sold a record amount of stocks in the South Korean securities market, marking six consecutive months of net outflows from foreign stock investments.
According to the Bank of Korea's report on financial and foreign exchange market trends released on July 14, foreign securities (stocks and bonds) recorded a net outflow of $30.72 billion in June. This indicates that the amount of foreign investment funds leaving the South Korean stock and bond markets exceeded the funds entering. The net outflow in June was the second largest on record, following March's figure of -$36.55 billion.
Specifically, stock investments saw a net outflow of $32.37 billion. Following a record outflow in May, June also experienced significant capital flight. This trend is attributed to heightened caution among investors regarding global artificial intelligence (AI) investments, leading to a decline in investment sentiment and a rebalancing of portfolios due to rising stock prices.
In contrast, bond investments saw a net inflow of $1.65 billion, supported by the maturity of government bonds and an increase in the weighting of the World Government Bond Index (WGBI).
From the beginning of the year through June, the total net outflow reached $100.93 billion, with stock investments accounting for $110.21 billion of that amount.
The won-dollar exchange rate rose significantly in June, reaching 1,549.4 won, influenced by foreign net selling of Korean stocks and uncertainties in the Middle East. The exchange rate fluctuated by 7.6 won, with a change rate of 0.50%.
The credit default swap (CDS) premium for South Korean government bonds (based on five-year foreign exchange stabilization fund bonds) averaged 23 basis points last month, down 2 basis points from the previous month’s 25 basis points.
This improvement is interpreted in light of the recent announcement of a memorandum of understanding (MOU) between the United States and Iran regarding a ceasefire.
* This article has been translated by AI.
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