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S. Korea’s financial assets in US hit record high in 2020

A Wall Street sign outside the New York Stock Exchange in the Manhattan borough of New York City, New York, US, April 16, 2021. (Reuters)
A Wall Street sign outside the New York Stock Exchange in the Manhattan borough of New York City, New York, US, April 16, 2021. (Reuters)
The value of South Korea’s financial assets in the United States hit a record-high last year, backed by local retail investors’ increased interest in the US stock market, central bank data showed Wednesday.

As of end-2020, Asia’s fourth-largest economy’s outstanding financial assets invested in the US gained $114.8 billion on-year to $534.5 billion, preliminary data from the Bank of Korea showed.

This marks both record-high total annual investment by South Korean entities in the US and a record on-year gain for the figure. Financial asset investment in the US accounted for 35.2 percent of the total overseas investment.

Overall, South Korea’s outstanding financial assets invested overseas gained $207.2 billion on-year to $1.519 trillion in the cited period. The total investment last year hit a record-high as well.

Trailing behind the US, South Korean entities’ financial assets in the EU gained $40.3 billion to $291.9 billion in the same period, ranking No.2 in terms of size and taking up 19.2 percent of the pie. The size of financial assets in Southeast Asia ranked No.3, increasing $20 billion on-year to $201.5 billion and accounting for 13.3 percent of the total.

Another key market, China saw its financial assets from Korea increase $16.7 billion to $155.5 billion.

“The record-high jump in overseas financial assets last year is due to a surge in overseas stock purchases by local retail investors, due to a stock market rally,” an official at the BOK’s international investment position team under the economic statistics department said in a briefing.

“Besides the US, assets also increased in the EU, Southeast Asia, Japan and other economies due to factors such as noticeable gain in the Nasdaq and the weak dollar trend,” the official added.

Onlookers say that while Korea‘s investment in the US itself may have increased, the US stock market gains last year attributed to the record-high figure as well. Last year, tech stocks propelled the Nasdaq to a 43.6% gain -- its fifth best year ever -- and the S&P 500 increased 16.3 percent in the same period. The Dow Jones added 7.2 percent.

By currency, overseas financial assets held in US dollars amounted to $861.4 billion as of end-2020, accounting for 56.7 percent of the total. Assets held in euros amounted to $161.5 billion, or 10.6 percent of the pie.

By Jung Min-kyung (