November 21, 2024

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An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Thursday. (Yonhap)

South Koreans' investments in foreign assets have reached a record high, while foreign investors continue to pull out of the local market, pushing the gap to an all-time high.

According to Bank of Korea's International Investment Position report for the third quarter, the nation's net foreign financial assets in the came to $977.8 billion as of the end of September, up $119.4 billion from the previous term.

This marked the third consecutive quarter of growth, with the increase being the second-largest on record, following the $121.2 billion rise in the third quarter of 2021.

This means that South Koreans' investments abroad exceeded foreign investments in the country by $977.8 billion. As of the third quarter, foreign financial assets totaled $2.51 trillion, while foreign financial liabilities amounted to $1.53 trillion.

South Koreans' investments in overseas assets have been on a consistent upward trend, with foreign financial assets reaching a new high for the fourth consecutive quarter.

Of the $2.51 trillion invested abroad by Koreans, nearly $1 trillion was allocated to foreign securities. According to Bank of Korea data, the balance of overseas securities investments stood at $996.9 billion as of the end of September, increasing by $64.6 billion in just three months.

Expectations of interest rate cuts also boosted overseas bond investments, which rose by $1.79 billion during the same period.

The Bank of Korea noted that both transaction factors, such as expanded purchases, and non-transaction factors, including changes in the valuation of held securities and exchange rate fluctuations, contributed to the growth.

In contrast, foreign investment in Korean assets, as reflected in foreign financial liabilities, decreased by $1.1 billion over the past three months. While direct investments rose by $19 billion, foreign securities investment totaled $957.5 billion, down by $26.7 billion.

This marked the first time that Koreans’ overseas securities investment, at $996.9 billion, surpassed foreign investment in the Korean securities market, which stood at $957.5 billion.

Foreigners have also continued a selling streak in the Korean stock market. After net buying 1.7 trillion won in the Kospi in July, foreign investors have net sold since, with net sales of 2.86 trillion won in August, 7.92 trillion won in September and 4.7 trillion won in October. So far this month, they have sold around 2.3 trillion won.

Meanwhile, South Korea's external debt rose by $44.4 billion to $702.7 billion in the third quarter. Short-term external debt, due within a year, increased by $16.8 billion to $158.7 billion, while long-term debt grew by $27.6 billion to $544 billion. The rise in short-term debt driven by increased foreign bond investments, fueled by global expectations of interest rate cuts, according to the BOK.

By Choi Ji-won (jwc@heraldcorp.com)