Bloomberg News

Global Funds Cut Korean Bond Holdings for First Month in Eight

October 04, 2011

Oct. 5 (Bloomberg) -- Global funds cut their holdings of South Korea’s local-currency bonds in September for the first time in eight months and pulled funds from the nation’s shares, the financial markets watchdog said.

The amount of debt owned by overseas investors fell by 2.5 billion won ($2.1 million) and their overall holdings totaled 85.1 trillion won as of Sept. 30, the Financial Supervisory Service said in an e-mailed statement today. European funds were the largest sellers as the region’s debt crisis prompted banks to free up cash, the FSS said.

Funds based in the U.K. and France cut holdings by 924.6 billion won and 823.5 billion won, respectively, FSS data show. Thai investors were the biggest buyers with their ownership increasing by 726.5 billion won, while U.S. funds boosted holdings by 619.3 billion won.

Global investors sold 1.3 trillion won more of the nation’s stocks than they bought in September, the FSS said. The outflows were recorded amid lingering concerns about Europe’s debt crisis and signs the global economy is slowing, the watchdog said.

The won fell 9.5 percent in September, the biggest slump since February 2009, according to data compiled by Bloomberg. The nation’s benchmark three-year bond yield rose 4 basis points to 3.54 percent and the Kospi Index of shares dropped 5.9 percent, Korea Exchange Inc. prices show. A basis point is 0.01 percentage point.

--Editors: James Regan, Simon Harvey

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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