Overseas Investors Become Net Buyers of Korean Shares in July


On Thursday, data from the Bank of Korea indicated that foreign investors had become net purchasers of South Korean stocks in July due to a positive outlook for the semiconductor and secondary battery industries.

The BOK reported that offshore investors had acquired a total of $440 million worth of domestic stocks last month, a reversal from the net selling of $310 million observed in June. The central bank claimed that the influx of foreign capital was spurred by the anticipated success of Samsung Electronics and SK hynix, as well as secondary battery producers including LG Energy Solution.

In addition, offshore investors bought a net $6 million of local bonds, compared to net buying of $3.23 billion in the prior month.

The credit default swaps (CDS) premium for South Korea’s five-year dollar-denominated currency stabilization bonds was 31 basis points in July, a dip from the 35 basis points observed in June. A basis point is 0.01 percentage point.

The CDS premium reflects the cost of hedging credit risks on corporate or sovereign debt. An increase implies a decrease in the credit spreads of sovereign bonds and higher borrowing costs.


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