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Foreigners net sellers of Korean stocks in Jan.

An electronic board showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of the Hana Bank headquarters in Seoul on Feb. 14, 2022. (Yonhap)
An electronic board showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of the Hana Bank headquarters in Seoul on Feb. 14, 2022. (Yonhap)
Foreigners were net sellers of Korean shares in January, ending their buying spree in December last year as investor appetite soured on signals from the US Federal Reserve that it was accelerating its policy tightening measures, data showed Monday.

In January, foreigners offloaded a net 1.6 trillion won ($1.3 billion) in shares, having bought 629 billion won in the benchmark Kospi market while shedding 2.3 trillion won in the junior Kosdaq. They purchased bonds of 3.6 trillion won in the same period, according to the Financial Supervisory Service.

As of January, foreigners held shares worth 722 trillion won, which is 28 percent of all Korean stocks. Forty percent of the foreign shares belonged to American investors.

Bonds held by foreigners amounted to 217 trillion won in total value, the highest since January last year. Asian investors accounted for 46 percent of the entire holdings.

Meanwhile, the Korea Exchange said the stock exchanges are seeing a steady drop in trading volume, with the rate of transactions hitting 17.6 percent in January compared to 60.4 percent in June last year. The dip indicates that fewer sell and buy orders had taken place.

Analysts attribute the fall to waning investor confidence as the US Fed looks to raise interest rates and cut prolonged pandemic support to the market.

Data recently provided by a group of local brokerages and asset managers also showed that Korean investors are reallocating money withdrawn from their investment accounts to safer options like money market funds and cash management accounts.

MMFs offer little price volatility and immediate liquidity as fund operators invest in high-quality, short-term debt securities and offer daily redemptions, while CMAs help investors handle savings and other cash transactions while earning interest.

The benchmark Kospi slid Monday to 2704.48, down 43.23 points or 1.57 percent from Friday’s closing. The fall comes amid warnings that Russia could invade Ukraine at any time, which prompted a selling spree among foreign investors.

Foreigners and retail investors offloaded 88.5 billion won and 52.4 billion won in shares, respectively, while institutions snatched up shares worth 112.8 billion won.

By Choi Si-young (siyoungchoi@heraldcorp.com)
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