U.S.-based investor Franklin Templeton Investments, the biggest overseas owner of South Korean bonds, has scaled back its exposure to local bonds for the second consecutive month, stoking concerns over possible capital outflows from the country, industry sources said Friday.
According to NH Investment & Securities, six out of nine Franklin Templeton‘s funds that have exposures to Korean bonds had $13.22 billion worth of local bonds in their portfolio as of end-November, down $360 million from a month ago and falling $1.52 billion from end-September.
South Korean bonds accounted for 14.9 percent of Franklin Templeton’s assets as of end-November, also down from 16.3 percent at the end of September, according to the securities firm.
“Its exposure to Korean bonds might have been further reduced this month as a huge chunk of its Korean bonds matured recently,” said Shin Dong-soo, an analyst at NH Investment & Securities.
Such fund redemptions or sales by Franklin Templeton could ignite worries that foreign capital could leave the country, delivering a shock to the overall financial markets.
Market analysts said the U.S. Federal Reserve‘s planned tapering of its bond purchase scheme, coupled with the Korean won’s expected slide against the U.S. dollar, could further trigger redemptions of Korean bonds held by foreign investors. (Yonhap News)
