Foreign investors dumped nearly 6 trillion won ($5.6 billion) worth of South Korean stocks in August amid the first-ever U.S. credit cut rating and continued fears of Europe’s debt crisis, the financial regulator said Monday.

Overseas investors sold a net 5.9 trillion won of local equities in August, bringing their share holdings to 350.2 trillion won as of the end of last month, down from 399.3 trillion won as of end-July, the Financial Supervisory Service said.

The on-month decline drove down foreign stock ownership to 29.8 percent of the total market cap, falling below the 30-percent level for the first time since October, according to the FSS.

“Foreign net selling reached 4.8 trillion won between Aug. 1-12 but slowed to 1.1 trillion won in the latter half of the month,” the FSS said in an e-mailed statement, adding foreigners sold stocks for 17 trading sessions out of 22 last month.

U.S. investors were the biggest net sellers in August, offloading shares worth 1.3 trillion won. Investors from Luxembourg came next with 1.3 trillion won, followed by French investors with 1.1 trillion won.

In contrast, investors from China, Saudi Arabia and Singapore continued to snap up local shares. Singaporean investors bought shares worth a net 274.4 billion won, while purchases by Chinese and Saudi Arabian investors reached 187.6 billion won and 128.1 billion won, respectively.

Meanwhile, foreign ownership of local listed bonds hit 84.7 trillion won as of end-August, up from 84.2 trillion won a month earlier, as overseas investors continued to snap up listed Korean bonds on strong appetite for safer assets, the regulator said.

Foreign investors scooped up a net 100 billion won worth of bonds in August, extending their buying streak to a seventh straight month, according to the FSS.

U.S. investors were the biggest buyers with 1 trillion won, followed by Malaysian investors with 429 billion won and Chinese investors with 348 billion won.

European investors, however, opted to reduce their bond holdings by 1.2 trillion won, the FSS said. 

(Yonhap News)