Foreign Investors Return to South Korean Stocks After Ten Months
(MENAFN) Foreign investors returned as net buyers of South Korean equities in May for the first time in 10 months, driven by optimism surrounding the new government, according to data released Thursday by the Financial Supervisory Service (FSS).
In May alone, foreign investors acquired a net 2.01 trillion won (approximately 1.5 billion U.S. dollars) of domestic stocks. This marked a shift to net buying activity after nearly a year of net sales, spanning both the main KOSPI index and the smaller KOSDAQ market.
The renewed foreign demand came amid growing expectations of political stabilization. This follows President Lee Jae-myung’s inauguration on June 4, which came after a snap election triggered by the previous president’s removal due to a failed martial law attempt last December.
In addition, the Bank of Korea has eased monetary policy, lowering its benchmark interest rate by 25 basis points twice this year—in February and May—to 2.50 percent. This followed two similar cuts in October and November of the previous year.
Foreign holdings of South Korean stocks reached 748.8 trillion won (551.8 billion dollars) by the end of May, representing 26.7 percent of the country’s total market capitalization.
Foreign investors also increased their local bond purchases, acquiring a net 16.66 trillion won (12.3 billion dollars) worth of listed bonds in May. After accounting for maturing debt obligations of 5.32 trillion won (3.9 billion dollars), net foreign investment in local bonds totaled 11.34 trillion won (8.4 billion dollars) last month.
At the end of May, foreign ownership of domestic listed bonds stood at 300.5 trillion won (221.4 billion dollars), comprising 11.2 percent of the total bond market.
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