Foreign investment in S.Korea bonds falls in Aug, first time in 7 mths
SEOUL, Sept 5
SEOUL, Sept 5 (Reuters) - Foreign net investment in South Korean bonds fell in August due to redemptions on matured debt, data showed on Thursday, marking the first drop in seven months as speculation heightened that the U.S. Federal Reserve will soon start reducing its bond-buying stimulus programme.
Foreign net investment in won-denominated debt fell by 2.1 trillion won ($1.92 billion) 100.8 trillion last month as 3.7 trillion won worth of bonds matured during the month, the Financial Supervisory Service (FSS) said in a statement.
The financial markets regulator noted that foreigners bought 1.6 trillion won worth of won-denominated debt last month, down from 3.9 trillion won in July.
The regulator didn't cite any factors for the drop in net foreign investment, but the Fed's plans to reduce its stimulus has prompted a capital flight from many emerging economies as they look to invest in dollar-based assets amid rising U.S. Treasury yields.
"The issue was that foreigners opted not to reinvest what they got back from debt redemptions, but that was against the backdrop of unrest in global markets as well as the Fed tapering issue," said Daewoo Securities fixed-income analyst Yoon Yeo-sam. "I think this behavior reflected caution but I don't think (August's outflows) suggests any kind of an exodus."
Net investment by Swiss and Israeli investors, for example, was at 285 billion won and 201 billion won last month, respectively, down from net investment of 303 billion won and 442 billion won in July.
Still, offshore investment in domestic stocks remained robust.
Foreigners bought a net 1.5 trillion won worth of South Korean stocks during August, marking the biggest rise since December 2012. The FSS attributed the inflows to eased concerns about a rapid unwinding of the Fed's quantitative easing programme and South Korea's strong economic fundamentals.
"Korea's export-centered economy benefited from a stronger global economic outlook, while also absorbing foreign outflows from other emerging markets with firm fundamentals," said IM Investment & Securities analyst Kang Hyun-gee.
Total net investment in local stocks and bonds fell by 536 billion won last month, compared with a rise of 3 trillion won in net inflows during July. ($1 = 1094.5500 Korean won) (Reporting by Se Young Lee; Editing by Shri Navaratnam)
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- U.S. war veteran released by North Korea returns home |
- WTO overcomes last minute hitch to reach its first global trade deal
- Ice storm causes blackouts, delays in Texas, Arkansas
- China's parliament: Japan has "no right to criticize" air defense zone