The Korea Herald


[Monitor] US holdings of Korean stocks at record, rate hike-induced exodus feared

By Lee Joo-hee

Published : Feb. 7, 2018 - 17:17

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US investors held 265.1 trillion won ($244 billion) worth of stocks listed in South Korea as of the end of 2017, accounting for nearly 42 percent of all foreign-owned stocks, data from the Financial Supervisory Service showed Wednesday.

US investors net bought stocks worth over 13 trillion won last year, becoming a major force behind the local bourse’ strong rally.

The volume of US investment has increased by fourfold from 2008, when the Fed began its zero-rate policy, pushing investors to seek higher returns abroad.

As the US central bank is now poised to raise interest rates at a faster-than expected pace of three to four times this year, US investment funds could rush out of Korea, dealing a blow to the local stock market, watchers warned.

Korea’s central bank is expected to raise the key rate only once or twice this year, in consideration of large household debt. This means there could be the first rate reversal between Korea and the US in 10 years. (