By Lee Hyo-sik
Staff Reporter
Ethnic Koreans residing overseas brought a record amount of dollars into the country in the first half of the year to take advantage of the weakened Korean won and discounted property prices in the wake of the global economic slump.
They snatched up residential and commercial properties here early this year, expecting real estate prices to go up when the economy returns to normal. They thought substantial currency gains could be generated if they put money into the won-denominated assets and sell them later when the Korean currency is stronger against the dollar.
As they expected, the local currency has strengthened against the dollar and real estate prices have jumped sharply on the easing of the global credit crunch and growing expectations for an economic rebound, making them much richer than several months ago.
According to the Bank of Korea (BOK) on Monday, the accumulated inbound capital transfer during the January to June period this year reached $1.61 billion, 3.5 times more than $460 million in the same period of 2008. The amount is 16.1 times and 23 times larger than what Korea received from abroad through various capital transfers in 2007 and 2006, respectively.
The central bank said most of the incoming capital was brought in by ethnic Koreans seeking to realize capital gains from real estate and currency investments.
``The nation's rising capital transfer from overseas this year was largely attributed to ethnic Koreans' growing investment interests here. They were interested in purchasing apartments and office buildings in Seoul and its adjacent areas amid the discounted prices since the international financial market meltdown,'' a BOK official said.
He then said many of them who bought properties early this year have realized substantial capital gains thanks to the rapidly recovering real estate sector over the past few months. ``They also bet on the won's appreciation against the dollar and generated substantial gains on foreign exchange transactions.''
Additionally, many ethnic Koreans kept money here rather than took it out of the country. The central bank said the outbound capital transfer totaled $601 million in the first six months of this year, down 26.6 percent from $820 million in the same period in 2008.
The nation's capital account, which traces cross-border investments, posted a net inflow of $1 billion in the first half, compared with a net outflow of $360 million a year ago. It was the first net inflow in 38 years since 1981 when cross-border investments recorded a $1.3-million net inflow.