Foreigners cut local shareholdings in March

Foreign investors cut holdings of local shares for the second straight month in March amid worries over political unrest in the Middle East region, the financial regulator said Monday.

Foreigners sold a net 772 billion won ($709.4 million) of Korea’s listed shares last month, further reducing local share holdings following their net selling of 3.72 trillion won in February, the Financial Supervisory Service (FSS) said.

Even after the net selling in the last two months, foreigners’ total stock holdings reached 395.45 trillion won as of the end of March, or 30.6 percent of the country’s total market cap, up from 30.5 percent as of end-February, the FSS said. The modest growth reflects local shares’ solid price gains last month.

“The amount of net selling sharply diminished last month compared with February on easing global risks like political unrest in the Middle East and the Japanese earthquake,” the FSS said in a statement. “Growing hopes on local firms’ earnings growth also helped.”

Meanwhile, overseas investors’ net holdings of the nation’s bonds rose for a second month on purchases from the U.S. and China.

Bonds held by foreign investors increased by a net 996 billion won ($917 million) to 75.3 trillion won as of March 31.

Trading volume in bonds by overseas investors fell to 6.1 trillion won in March from the 11.9 trillion won monthly average in 2010 after the government in January revived a tax of as much as 14 percent on interest income from treasury and central-bank bonds held by foreigners, the regulator said.

U.S. investors were the biggest buyers of bonds in March, with their holdings increasing by a net 514.1 billion won, according to the statement. Thailand was the biggest seller, with net sales of 632.1 billion won, the regulator said.

(From news reports)