Foreign holding of South Korean bonds hit a new record high last month as offshore investors snapped up local bonds on expectation for the local currency's appreciation against the U.S. dollar, the financial watchdog said Wednesday.
Foreign investments in local listed bonds amounted to 88.5 trillion won (78.45 billion U.S. dollars), or 7.2 percent of total ownership, as of the end of March, breaching the previous record high of 86.7 trillion won tallied in Nov. 2011, according to the Financial Supervisory Service (FSS).
The record-breaking bond holdings came as overseas investors scooped up local bonds on expectations for the South Korean won's ascent against the greenback, the watchdog said.
The largest foreign owner was the European investors who held 25 trillion won in local bonds, or 28.2 percent of total foreign ownership, as of end-March. It was followed by U.S. investors with 18.2 trillion won, Luxembourg investors with 14 trillion won and Chinese investors with 10.4 trillion won.
Foreign net investments, calculated by net bond buying minus the amount of maturing debts, reached 1.8 trillion won in March as the European and U.S. investors kept their net investment trend for three straight months, according to the FSS.
The Chinese investors widened their net investment to 154.3 billion won in March from 7.1 billion won during the January- February period, with the Norwegian investors maintaining their net investment worth 237 billion won last month.
In contrast, net investment by the British and Hong Kong investors reduced by 292.3 billion and 93 billion won in March respectively, posting the second consecutive month of decline.
Meanwhile, foreign investors kept their net buying streak in local stocks for three straight months in March, but their net buying eased amid concerns over the global economic slowdown and the technical correction from the rally staged during the short period of time.
Investors from Cayman Islands were the biggest net buyers in March by snapping up a net 724 billion won worth of local shares. Investors from Luxembourg came next with 528.6 billion won, followed by French investors with 266.4 billion won.
U.S. investors, however, turned to net sellers after buying a massive amount of shares in January and February due to demand for profit-taking. Investors from the U.S. were the largest net sellers in March by dumping a net 502.7 billion won worth of local stocks, followed by Singaporean investors with 282.2 billion won and the British investors with 214.5 billion won.
As of the end of March, foreign holdings in local listed stocks stood at 400.7 trillion won (355.36 billion U.S. dollars), or 31.3 percent of the total market capitalization, according to the FSS. The figure topped the 400 trillion won level for the first time in 10 months.
The largest owner was the U.S. investors who held 163 trillion won in local stocks, or 40.7 percent of total foreign holdings, as of end-march. It was followed by the European investors with 122.6 trillion won, British investors with 42.1 trillion won and Luxembourg investors with 27.4 trillion won.