Foreigners buy over 10 bln USD of S.Korean stocks in 2016

Foreign investors bought over 10 billion U.S. dollars of South Korean stocks last year as expectations for higher interest rates discouraged investment into local bonds, financial watchdog data showed on Monday.

Foreign purchase of domestic stocks reached 12.1 trillion won (10.23 U.S. dollars) in 2016, according to Financial Supervisory Service (FSS) data. It was the largest yearly figure since 2012.

European and U.S. investors bought stocks worth 8.4 trillion won and 7.7 trillion won each last year, but Asian and the Middle East investors withdrew 1.8 trillion won and 2.8 trillion won each from the local stock market.

As of end-2016, foreign ownership of local stocks amounted to 481.6 trillion won, topping 480 trillion won for the first time. The foreign holdings accounted for 31.2 percent of total market capitalization, up 2.6 percentage points from a year earlier.

In the local bond market, 12.3 trillion won worth of foreign capital flowed out on the expected U.S. interest rate hikes, which led to higher market rates and lower bond prices here.

Investors from the U.S., Europe, Asia and the Middle East all dumped domestic bonds last year.

Foreign holdings of local bonds stood at 89.3 trillion won as of end-2016, down 11.9 percent from a year ago. Endit