Foreign investors return to South Korean stocks after months of selling

SEOUL, September 18 (AJP) - Foreign investors turned net buyers of South Korean stocks in August, ending seven months of selling, while sharply reducing their bond holdings, according to data released by the Financial Supervisory Service on Friday.

They bought 344 billion won (US$249 million) worth of listed South Korean stocks in August, marking their first monthly net purchase since December last year.

Most of the purchases were made on the main board, with foreign investors net buying 1.89 trillion won worth of KOSPI shares while net selling 1.55 trillion won on the junior KOSDAQ.

As of the end of August, foreign investors held 2,280.61 trillion won worth of South Korean stocks, up 25.10 trillion won from the previous month. Their holdings accounted for 34.8 percent of total market capitalization, down 1 percentage point from July, as the overall value of the South Korean stock market rose at a faster pace.

By country, U.S. investors held the largest amount of South Korean stocks at 999.65 trillion won, accounting for 43.8 percent of total foreign holdings. They were followed by those from the United Kingdom with 176.79 trillion won, Singapore with 139.92 trillion won, Luxembourg with 129.96 trillion won and Ireland with 114.56 trillion won.

But the trend was different in the bond market, where foreign investors pulled out a net 4.74 trillion won in August, ending three straight months of net inflows. They net sold 3.94 trillion won in listed bonds and were repaid 801 billion won from maturing bonds, leaving them with 330.27 trillion won worth of South Korean listed bonds at the end of August, down 5.8 trillion won from the previous month.

Their combined holdings of listed stocks and bonds stood at 2,610.88 trillion won, as the increase in stock holdings was more than offset by the decline in bond holdings.

AJP Takeaways

- Foreign investors returned to South Korean stocks in August, buying a net 344 billion won after seven straight months of selling.

- Foreign bond holdings fell sharply, with investors pulling out a net 4.74 trillion won and reducing their listed bond holdings to 330.27 trillion won.

- U.S. investors held the largest share of foreign-owned South Korean stocks, with 999.65 trillion won, or 43.8 percent of total foreign holdings.