South Korea sees foreign inflows to stocks, bonds in January

© Reuters. A journalist films the final stock price index after the ceremonial closing event of the 2016 stock market in Seoul© Reuters. A journalist films the final stock price index after the ceremonial closing event of the 2016 stock market in Seoul

SEOUL (Reuters) – Foreigners poured funds into South Korea’s stock and bond markets in January, official data showed on Monday, signaling a halt for now to the sell-off seen before and after the U.S. Federal Reserve raised interest rates in December.

Offshore investors boosted their bond holdings by a net 1.7 trillion won ($ 1.5 billion) worth in January while they snapped up a net 1.8 trillion won worth of shares, the Financial Supervisory Service (FSS) said in a statement.

It was the first month of bond inflows since July last year and compared with outflows of 0.5 trillion won worth in December.

Investors in Asia, Europe and the Americas all raised their bond holdings in January, the FSS said, with those in Asia buying the most.

The statement said it was the biggest bond inflow since May 2015, thanks to stabilizing foreign exchange rates and a smaller amount of bonds maturing in January compared with previous months.

Meanwhile, foreigners bought South Korean shares for a second straight month, led by investors in the United States and Asia. Those in Europe and the Middle East sold South Korean stocks in January, the FSS said.

The data was in line with a high-ranking finance ministry official’s comments to Reuters last week that foreign flows seemed to be returning to South Korea after financial markets were jolted by the Fed’s rate increase and especially Donald Trump’s stunning victory in November in the U.S. presidential election.

As of end-January, foreigners held 32.0 percent of all South Korean shares and 5.7 percent of bonds.

($ 1 = 1,139.2000 won)

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