As stock prices in major countries rise, net investments in foreign stocks have continued, leading to an increase in the balance of foreign securities investments by domestic institutional investors.
According to the Bank of Korea's report on 'Foreign Securities Investment Trends of Major Institutional Investors in Q2,' the balance of foreign securities investments by domestic institutional investors (at market value) was recorded at $549.68 billion as of the end of June. This marks an increase of $46.72 billion (9.3%) compared to the previous quarter.
The balance of institutional foreign securities investments had increased for four consecutive quarters since the first quarter of last year (+$10.01 billion) but saw a decline in the first quarter of this year before returning to an upward trend in the second quarter.
A Bank of Korea official explained, "The continued net investment in foreign stocks and valuation gains are attributed to rising stock prices in major countries, driven by expectations for expanded investments related to artificial intelligence (AI)."
By investment entity, asset management companies (+$44.66 billion), foreign exchange banks (+$2.81 billion), and securities firms (+$0.1 billion) saw increases in their investment balances, while insurance companies (-$0.84 billion) experienced a decrease.
In terms of products, foreign stocks increased by $45.76 billion. After experiencing the largest decline in three and a half years in the previous quarter, there was a significant rebound in the first quarter.
During the second quarter, the U.S. S&P 500 index rose by 14.9%, and the Nasdaq Composite index increased by 21.4%. The Euro Stoxx 50 in Europe and Japan's Nikkei 225 also rose by 13.6% and 37.2%, respectively.
Foreign bonds maintained their levels from the previous quarter. The mixed investment sentiment was a result of concerns over falling bond prices due to rising interest rates and the lure of bargain buying. In fact, the yield on 10-year U.S. Treasury bonds rose from 4.32% at the end of March to 4.47% at the end of June, an increase of 15 basis points (1 basis point = 0.01 percentage point).
The balance of foreign currency-denominated securities (Korean paper) issued by domestic financial institutions or companies increased by $960 million, primarily driven by foreign exchange banks.
* This article has been translated by AI.
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