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Foreigners pull out of S. Korean bond market

July 13, 2015 - 10:32 By KH디지털2
Foreign investors are showing signs of leaving the South Korean bond market, while the "Grexit" concerns and the recent Chinese rout have triggered an outflow of foreign funds from the country's stock market, industry data showed Monday.

According to the data, offshore investors held 105 trillion won ($92.8 billion) worth of won-denominated bonds as of Friday, down 2.7 trillion won from 107.7 trillion won tallied last Monday.

Their ownership of Treasury bonds and monetary stabilization bonds dropped to 5.83 percent Friday, marking the lowest level since April 16, 2010.

Market watchers said that some foreigners have started pulling their money out of the South Korean debt market as they may have suffered a liquidity shortage stemming from the stalled Greek debt talks and the sharp drop in the Chinese stock market.

"As the Chinese market has experienced wide fluctuations, foreign investors sold won-denominated bonds to secure liquidity," said Kim Myung-sil, a senior researcher at KB Investment & Securities Co.

The outflow of foreign funds has already begun in the stock market as a net 2.8 trillion won was withdrawn by foreign investors from the local bourses between June 8 and July 10.

The benchmark KOSPI tumbled more than 3 percent last week after the Greek referendum to reject austerity plans in return for a bailout and the Chinese index losing nearly 30 percent. (Yonhap)