Foreign investors have boosted their won-denominated bond holdings so far this year, industry data showed Tuesday, despite growing tensions on the Korean Peninsula over North Korea's nuclear and missile programs.
Foreign inflows to the South Korean bond market also came in spite of the US Federal Reserve's decision to raise interest rates this year.
Offshore investors have purchased a net 16.5 trillion won ($14.5 billion) worth of won-denominated bonds as of last Friday, raising their holdings to 99.3 trillion won.
During the first 15 days of this month, when concerns about North Korea rose, foreign investors bought 2.9 trillion won worth of South Korean bonds, according to the data.
Tensions between North Korea and the US have risen in recent weeks as Pyongyang test-launched a series of ballistic missiles, prompting the US to issue hawkish warnings against the North.
US Vice President Mike Pence, who visited South Korea this week, warned North Korea that "all options are on the table" in dealing with Pyongyang's defiant pursuit of nuclear and missile programs.
Kang Seung-won, an analyst at NH Investment & Securities, said foreign central banks and sovereign funds were among net buyers of South Korean bonds.
Kang said this year's foreign inflows to the South Korean bond market bucked the trend, given historical market data that showed investor sentiment towards won-denominated assets had become weaker when geopolitical risks surrounding North Korea soared. (Yonhap)