Why Did Foreign Investors Become Net Sellers of S. Korean Securities in August?
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Synopsis
In August, foreign investors shifted to net selling of South Korean securities, mainly due to profit-taking in equities and reduced arbitrage in the bond market. This marks the first decline in foreign investment in four months, as the Bank of Korea reveals significant market trends impacting investor sentiment.
Key Takeaways
- Foreign investors shifted to net selling of South Korean securities.
- Net outflow reached $600 million in August.
- Profit-taking impacted equity investments significantly.
- The Korean won remained stable against the U.S. dollar.
- Major South Korean stocks showed positive growth trends.
Seoul, Sep 12 (NationPress) In August, foreign investors became net sellers of South Korean securities, influenced by profit-taking in equity markets and decreased arbitrage opportunities in the bond sector, according to central bank statistics released on Friday.
Offshore investors acquired a net total of US$180 million in local stocks during the previous month, while they sold off $770 million in bonds, leading to an overall net outflow of $600 million, as reported by the Bank of Korea (BOK).
This represents the first monthly drop in foreign investment in securities for four consecutive months.
An official from the BOK commented, "Net inflows into equity investments significantly slowed in August due to profit-taking in the semiconductor sector and others. In the bond market, maturities and a decrease in arbitrage opportunities resulted in net outflows."
The central bank also indicated that the Korean won remained relatively stable against the U.S. dollar in August, fluctuating around the 1,390 won mark.
Daily variations in the won-dollar exchange rate increased, averaging 5.8 won in August compared to 5.1 won in July, the BOK noted.
In positive market news, South Korean stocks rose over 1 percent late Friday morning, approaching a new all-time high, thanks to significant gains in major chip companies following a recent surge in artificial intelligence (AI) stocks on Wall Street.
The Korea Composite Stock Price Index (KOSPI) climbed 37.19 points, or 1.11 percent, reaching 3,381.39 as of 11:20 a.m., exceeding the previous day’s record high of 3,344.2.
In overnight trading, major U.S. indices experienced gains, with the Dow Jones Industrial Average rising 1.36 percent, the tech-focused Nasdaq composite increasing 0.72 percent, and the S&P 500 climbing 0.85 percent.
Investor confidence was lifted by the latest U.S. consumer price index (CPI), which fueled expectations that the Federal Reserve might reduce key interest rates next week.
The CPI indicated that inflation remains above the Fed's 2 percent target, but conditions are stable enough to justify a rate cut, given the current weakness in the labor market.
In Seoul, market leader Samsung Electronics surged 2.32 percent, while its chipmaking competitor SK hynix soared 6.68 percent. Internet portal operator Naver gained 1.5 percent, and Kakao, which runs the country’s leading mobile messenger, jumped 7.43 percent.
Point of View
The recent trend of foreign investors shifting to net selling of South Korean securities underscores the importance of understanding market dynamics. As we continue to monitor these changes, it is essential to remain informed and adapt strategies accordingly to ensure national economic stability and growth.
NationPress
12/09/2025
Frequently Asked Questions
What caused foreign investors to sell South Korean securities?
Foreign investors sold South Korean securities due to profit-taking in equities and diminished arbitrage opportunities in the bond market.
How much did foreign investors withdraw from the South Korean market?
Foreign investors recorded a net outflow of $600 million in August.
What is the impact of the recent U.S. consumer price index on the market?
The recent U.S. CPI has led to increased expectations that the Federal Reserve may lower key interest rates, boosting investor sentiment.
Which sectors saw profit-taking in August?
Profit-taking was notably observed in the semiconductor sector and several others.
What trends are impacting the Korean won's stability?
The Korean won remained stable against the U.S. dollar, with slight fluctuations averaging 5.8 won in August.
