South Korea's rapidly aging population is likely to reduce the nation's overseas equities investment as seniors will likely move to sell assets due to falling living standards, researchers at the Bank of Korea said Wednesday.
As the global financial markets become more interconnected, older people will have a bigger impact on the nation's foreign currency market, Lim Jin-soo and Kim Young-rae said in a report.
If South Korea's overseas equities investment declines rapidly, it could affect the nation's sovereign ratings, they pointed out.
"A reduction in international investment assets means a decline in future sources for foreign currency earnings," the report said.
"This suggests that if international investment assets decrease dramatically, it could lead to concerns about possible insolvency and cause the creditworthiness of a country to fall, resulting in pressures for outflows of capital from it," it said.
In 2015, the number of South Koreans over 65 accounted for 12.8 percent of the population. The ratio is projected to grow to 28.7 percent by 2035 and 42.5 percent by 2065, according to the statistics office.
Nations are classified as an "aged society" if people over 65 make up between 14 percent and 20 percent of the population. (Yonhap)