Oil-producing countries will continue to pull their money out of the Korean stock market as they grapple with the prolonged slump in oil prices, a Korean brokerage house said Tuesday. 



According to KDB Daewoo Securities, the Korean equity market has suffered 15 trillion won ($12.45 billion) in net outflows from foreign investment since June 2015, and the biggest exit came from Saudi Arabia.

“Of the amount, withdrawals by Saudi Arabia accounts for nearly 30 percent at some 4.5 trillion won,” Kim Hyung-rae, a KDB Daewoo Securities analyst, wrote in a report.

He said the several trillion won in stock selloff seems to be led by SAMA Foreign Holdings, managed by the Saudi Arabia Monetary Agency, the country’s central bank, to offset declining revenue from crude exports.

“SAMA Foreign Holdings is likely to continuously reduce foreign assets including Korea as the country’s finance deteriorates,” he said.

Saudi Arabia is seeking to halt the erosion of its finances after oil prices have more than halved in the past year. The Saudi Arabian Monetary Authority’s reserves held in foreign securities have fallen about 17.7 percent from 627 trillion won in May 2015 to 516 trillion won in November.

“Low oil prices, if sustained, will further squeeze other oil-rich nations like Norway and (the United) Arab Emirates that haven’t pulled out as much money as Saudi Arabia,” he added.

Oil prices have plummeted to a 13-year low of under $30 a barrel, down 70 percent from its price 18 months ago.

By Park Han-na (hnpark@heraldcorp.com)