In September, foreign investment funds exited South Korea's stock and bond markets for the eighth consecutive month. Both stocks and bonds recorded net outflows, significantly increasing the total amount of capital leaving the country.
According to the Bank of Korea's report on international finance and foreign exchange market trends released on October 16, the total net outflow of foreign securities investment funds, including stocks and bonds, reached $19.97 billion in September. Based on the exchange rate of 1,352.8 won per dollar at the end of last month, this amounts to approximately 27 trillion won.
The net outflow figure has more than quadrupled compared to the previous month ($4.5 billion). The trend of net outflows has persisted since February.
By type of securities, stock investments saw a net outflow of $14.16 billion last month. After a slight net inflow in August, stock investments reverted to an outflow just a month later.
A Bank of Korea official explained, "Investor sentiment has turned negative due to rising global long-term interest rates and concerns over a slowdown in artificial intelligence (AI) investments, leading to the net outflow."
Bond investments experienced a net outflow of $5.81 billion. This outflow has continued for three consecutive months, increasing from the previous month's figure of $4.53 billion. Contributing factors include the maturity of government bonds and ongoing challenges in reinvestment due to the reversal of short-term profit trading incentives.
The credit default swap (CDS) premium for South Korean government bonds (based on the five-year foreign exchange stabilization fund bonds) remained stable at an average of 22 basis points in September, unchanged from August.
In September, the average daily fluctuation and volatility of the won-dollar exchange rate were 7.0 won and 0.52%, respectively, widening compared to the previous month (4.4 won and 0.31%).
* This article has been translated by AI.
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