Foreign investors rushed to the bond market in the South Korean financial market while leaving the local stock market in October, showed a recent data.
Such a trend stemmed from investors’ expectations that the Korean companies’ weak business performances in the third quarter (Q3) of this year and Spain’s bailout delay will cause sluggishness in the nation’s stock market for some time.
Overseas investors sold a net 1.1 trillion won ($1 billion) worth of Korean stocks while they net bought the local bonds worth 3.4 trillion won, according to the Financial Supervisory Service (FSS) Monday. As of late-October, foreign investors’ stock holdings came to 387.8 trillion won, down 4.5 percent from the previous month while their bond holdings grew 0.5 percent to reach 88.7 trillion won.
Foreign investors’ preferences for Korean bonds in the domestic market have been being propelled since August. On a monthly basis, the local bonds net bought by foreign investors have been on the rise from 259.4 billion won in August, 2.84 trillion won in September and 3.4 trillion won in October.
“Overseas investors began to engage in selling local stocks based on the assumption of the Korean companies’ weaker business performances in Q3,” explained an official of the FSS. “Another contributor is that the falling won value caused the US-based funds to redeem their bonds for profit-taking.”
[Written by Soohyun-Oh - Jieun Lee/ edited by Soyoung Chung]
[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]
