Foreign stock ownership hits record high in February

Foreign investors continued a buying spree on shares of South Korea’s listed companies in February for the third consecutive month, pushing up their holdings of local stocks to a record high, the country’s financial watchdog said Tuesday.

Foreign investors bought a net 658 billion won ($573 million) in shares on the local stock market in the month. Their holdings of local stocks of listed companies reached a record high of 503.4 trillion won at the end of February, accounting for 31.8 percent of total market capitalization here, according to the Financial Supervisory Service.

The FSS said that foreign investors showed a tendency to pick up high-ranked companies in terms of total market capitalization.

By nationality, investors from the US, the Cayman Islands and Luxembourg were the top three net buyers, while those from the Middle East and Asia were top net-sellers.

Investors from the US, accounting for 41 percent of total overseas investors, bought a net 2.1 trillion won in shares on the South Korean stock market, while those from the Cayman Islands, an infamous offshore financial center, and Luxembourg bought a net 295 billion won and 284 billion won, respectively.

Bucking the trend, investors from China sold a net 123 billion won in February amid growing tension between the two countries as South Korea accelerates the deployment of a US Terminal High Altitude Area Defense anti-missile battery.

Aside from January, Chinese traders have continued to remain net-sellers since August, after Seoul decided to deploy THAAD in July, FSS data showed. They sold a net 1.6 trillion won worth of shares here in 2016.

Overseas traders also held 96 trillion won in bonds as of the end of February, adding 5.18 trillion won from the end of January, the largest amount of monthly inflow since September 2009 with an inflow of 6.1 trillion won.

Overseas investors are likely to continue to scoop up South Korean shares in March as they bet on a strengthening local currency, according to Im No-jung, an analyst at Yuhwa Securities.

“When the inflow of overseas investors was mainly due to fundamentals of companies, I believe the recent trend is mainly because foreigners are betting on strengthening local currency,” Im said.

He said the impact of the intensifying THAAD row would have limited impact on foreign investments on the local stock market, as the protracted risk has already been reflected in stock prices.

China’s reported ban on travel agencies selling tour programs to South Korea weighed down on the stock market here -- especially companies highly exposed to the Chinese market -- on Friday, when foreign investors sold a net 31.9 billion won.

But in the first four trade days in March through Monday, foreign investors bought a net 1 trillion won worth of shares on the local bourse, according to the FSS. 

By Park Ga-young (gypark@heraldcorp.com)