On Tuesday, the Bank of Korea (BOK) revealed that foreign investors were net sellers of South Korean stocks in August due to worries about the Chinese economy’s slowing down.
Offshore traders disposed of an estimated $910 million worth of local stocks, compared to the $440 million they bought in the prior month. The BOK indicated that the net stock selling was driven by increasing anxiety over the Chinese economy, the world’s second-largest.
Foreigners also sold a net $790 million worth of local bonds, compared with net buying of $600 million a month earlier. Overall, foreign investors offloaded a net $1.7 billion worth of local stocks and bonds in August – the most since December 2022, when the figure was $2.42 billion.
The premium on credit default swaps (CDS) for South Korea’s five-year dollar-denominated currency stabilization bonds stayed at 31 basis points in August, the same as the preceding month. A basis point is 0.01 percentage point. The CDS premium indicates the cost of hedging credit risks on corporate or sovereign debt. A rise implies a drop in the credit spreads of sovereign bonds and higher borrowing costs.
sam@yna.co.kr
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