Foreign investors’ holdings of South Korean state bonds reached a record high last year due largely to the country’s relatively strong economic fundamentals and a stronger won, data showed Sunday.
Foreign investors held state bonds worth $68.6 billion at the end of last year, the largest-ever amount, according to industry data. The figure compares with $56.9 billion at the end of 2011 and $37.3 billion at the end of 2010, the data showed.
Their portion against combined state bonds listed on the local bourse also reached an all-time high of 11.99 percent at the end of last year, compared with 11.16 percent at the end of 2011 and 9.85 percent at the end of 2010, according to the data.
Foreign investors’ growing penchant for local state bonds has been fueled by a slump in the local stock market, a stronger local currency, and the country’s relatively sound fundamentals, analysts said.
“Demand for bonds sold by emerging countries increased sharply,” said Kim Soo-yon, an analyst at Daeshin Economic Research Institute. “In particular, the local currency’s sharp gain versus other currencies prodded them to buy more state bonds.”
Foreign investors’ buying spree of local bonds has continued this year as well with a net purchase of 2.55 trillion won through Tuesday. The reading is in stark contrast with a net selling of 1.69 trillion won worth of local stocks during the cited period, data showed. (Yonhap News)
