Foreigners became net buyers of local stocks last month after their net selling hit a nearly two-year high in June, mainly due to the U.S. Fed chairman's hint at maintaining its monetary stimulus policy, the financial regulator said Wednesday.

Overseas investors bought a net 1.34 trillion won ($1.16 billion) worth of local shares in July, a turnaround from the 5.14 trillion-won net purchase a month earlier, according to the Financial Supervisory Service (FSS).

The value of foreign investors' shareholdings reached 385.9 trillion won as of the end of July, up 74 trillion won from a year earlier, but the portion of their stock ownership shrank to 30.6 percent from 31.1 percent over the cited period, the FSS said.

After Federal Reserve Chairman Ben Bernanke signaled a gradual cut of its $85 billion-a-month bond purchase on June 22, policy uncertainties sent foreigners to exit the local market during that month.

But Bernanke said later the possibility of maintaining the bond-buying program is valid, attracting big inflows of foreign money to the local market, the FSS said.

As of end-July, the U.S. bought more shares than they had sold, logging its first monthly net buying of 1.4 trillion won on the local bourse since the beginning of this year. Singapore trailed behind with 944.5 billion won and Canada with 700 billion won.

However, British and French investors offloaded a net 5.2 trillion won and 498.9 billion won each, the FSS said. The United Kingdom extended its selling mode for the fifth consecutive session in July.

Foreign ownership of local bonds stood at 102.9 trillion won last month, up from 101.2 trillion won in June, as investors opted to increase bets in safer assets, the regulator said.

They bought a net 1.7 trillion won worth of bonds, with the U.S. and Germany being the biggest investors with a net 685.6 billion won and 491.0 billion won, respectively, according to the FSS. (Yonhap News)