Foreign investors expanded net sales of South Korean stocks this year on heightened geopolitical risks and concerns that a weaker yen would hurt Korean exporters, data showed Sunday.
Foreign investors unloaded a net $5.16 billion worth of Seoul shares from January to April, according to data by the Korea Center for International Finance.
Foreigners bought more shares than they sold in five Asian countries including Taiwan and India, purchasing a net $10.56 billion worth of stocks from seven Asian nations including South Korea and Thailand, it said.
South Korea’s key stock index has fallen 1.7 percent so far this year with it declining 2 percent in March and 1.07 percent in April.
Market analysts said that the weak performance in the Seoul bourse mainly resulted from increased geopolitical risks and growing concerns that a weaker yen would sap corporate profitability of Korean exporters.
Inter-Korean tensions used to have limited impacts on the Korean stock market, but as North Korea ratcheted up its war rhetoric in recent months, foreign investors have showed sensitive responses, analysts say.
A weaker yen has unnerved local policymakers as it makes prices of Korean products relatively more expensive in overseas market compared with their Japanese rivals.
Meanwhile, foreign investors snapped up stocks in Southeast Asian countries, betting on revival of domestic demand and a set of deregulation for foreigners, it added.
But market analysts said that foreigners may begin to view Asian markets as less attractive as shares in advanced markets like the U.S. and Japan gain ground.
“Foreign funds may move from emerging countries into advanced nations whose stock markets have been on the rise due to the economic recovery hopes,” said Lee Dae-sang, an analyst at Daishin Securities Co. (Yonhap News)