Global investors’ holding of local stocks to hit record high of W500tr


Foreigners recently became net buyers of Korean stocks amid policies of the U.S. and European Union to boost the regional and global economies.

Data released by the Financial Supervisory Service showed that foreign investors have bought local stocks and bonds worth a net 40.3 trillion won ($35.9 billion) so far this year.

Their net buying of bonds and shares came to 15.3 trillion won and 25 trillion won, respectively, between January and September, already surpassing the 31.6 trillion won posted for the 12 months of last year.

Foreign investors’ net purchase of stocks set an all-time monthly high of 6.6 trillion won in August, surpassing the previous record of 6.2 trillion won posted in January this year.

Their shareholdings reached 383.9 trillion won as of the end of August, up 4 trillion won from a month earlier and accounted for 31.4 percent of the total market capitalization, the FSS said.

Foreigners had remained net sellers for four straight months as of end-July, before they turned to a net buying streak for August.

British and French investors scooped up a combined 4.64 trillion won worth of local stocks after a net sell-off in July. Saudi Arabia snapped up local stocks for a sixth consecutive month, with a net buying of 717.7 billion won in August.

In September, net foreign buying has reached about 2.3 trillion won so far.

While Europe-based funds are taking the initiative in the massive inflows of foreign capital with net buying of 2.1 trillion won in September, U.S.-based funds also switched to a net buying mode with 375 billion won for the first time in seven months.

According to FSS officials, combined foreign ownership of Korean stocks and bonds is about to exceed 500 trillion won for the first time in history.

“The sufficient currency liquidity from quantitative easing in developed countries is being linked to aggressive investment in risky assets such as stocks and bonds in the Asian market,” a stock brokerage analyst said.

Foreign buying of local stocks gained speed upon the policy of the European Central Bank’s possible bond purchasing in early August.

The policy included that the ECB and the European Stability Mechanism would purchase Spanish and Italian treasuries in order to cope with the eurozone fiscal crisis.

Foreign capital from the U.S. has also flowed into the Korean market as the Federal Reserve and the Federal Open Market Committee launched QE3, a move which was unexpected by the market.

In April 2011, foreign holdings of stocks listed on the Korea Exchange exceeded 400 trillion won for the first time.

The record figure came four years after their share topped the 300-trillion-won mark in May 2007.

By Kim Yon-se (kys@heraldcorp.com)