Bloomberg News

Overseas Investors Boost Korea Bond, Stock Holdings in February

March 04, 2012

Global funds raised their holdings of South Korean bonds in February by the most since July and bought more stocks than they sold for a third month, according to the financial regulator.

The value of local-currency bonds owned by overseas investors rose by 1.8 trillion won ($1.6 billion) to 86.4 trillion won, 7.1 percent of outstanding notes, the Financial Supervisory Service said in an e-mailed statement today. Expectations for the won to appreciate and a stable economy are spurring global demand for investments in South Korea, the regulator said.

Funds based in Luxembourg were the biggest buyers of Korean debt with their ownership increasing by 952 billion won, while those in the U.S. boosted holdings by 882.5 billion won, FSS data showed. Chinese investors increased their holdings by 0.1 billion won in February after net investment of 7 billion won in January and 34 billion won in December, according to the financial watchdog.

Overseas investors bought 3.9 trillion won more of the nation’s equities than they sold last month, according to the FSS. Investors based in U.K. were the biggest buyers, followed by those in the U.S. and the Cayman Islands, it said.

The won strengthened 0.4 percent against the dollar in February after gaining 2.6 percent in January, according to data compiled by Bloomberg. Three-year government bond yields rose seven basis points, or 0.07 percentage point, to 3.45 percent last month, Korea Exchange Inc. prices show. The Kospi (KOSPI) Index of shares gained 3.8 percent.

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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