Bond ownership by foreign investors in the South Korean equity market surpassed 100 trillion won (US$91.5 billion) again after more than a year despite concerns about a possible rate hike in the United States, financial data showed Friday.
   
According to the data compiled by the Financial Supervisory Service (FSS), offshore investors held a total of 100.42 trillion won worth of local bonds as of Tuesday, piercing the 100 trillion won level for the first time since it hit 100.25 trillion won on Sept. 9, 2013.
   
After peaking at 103.5 trillion won in July last year, foreign holdings of local bonds had stagnated at around 90 trillion won as the U.S. Fed's tapering dampened investor sentiment.
  
The strengthening South Korean won and the end of quantitative easing by the Fed, however, attracted foreign inflows again in recent months, pushing up the foreign bond ownership over the 100 trillion won mark.
  
Foreigners have purchased a net 29.9 trillion won worth of local debts since the beginning of this year, with a net 4.6 trillion won buying in October alone.
  
In the stock market, on the other hand, foreigners dumped a net 2.27 trillion won.
   
Market watchers said they expect the foreign inflows to continue for a while because the South Korean economy has stronger fundamentals than other emerging countries. Also, South Korea's key rate is still higher than the U.S. and countries with similar sovereign ratings such as Japan and Taiwan, even after the Bank of Korea (BOK) lowered the rate to a record low 2 percent in October.
   
"As for two-year bonds, South Korea offers yields of 0.18 percentage point higher than the U.S.," said Kim Ji-man, an analyst at NH Investment & Securities Co.
  
"Unless the BOK cuts the key rate further, the foreign bond investment will be stable until the beginning of next year," said Hwang Se-woon, a researcher at the Korea Capital Market Institute. (Yonhap)