By Kang Seung-woo
Share holdings by foreign investors increased last year, with the United States topping the list by nation, the Financial Supervisory Service (FSS) said Thursday.
According to the financial watchdog, foreigners held 386.36 trillion won in listed stocks, or 31.2 percent of total market capitalization as of the end of December, up 30.5 percent from 295.98 trillion won the previous year.
U.S. investors held 150.611 trillion won in stocks, accounting for 39 percent of the foreign shareholdings, followed by the United Kingdom with 43.03 trillion won and Luxembourg with 28.08 trillion won apiece.
Although China’s share holdings was the 17th largest, it marked the biggest year-on-year increase by reporting a 106.4 percent gain in Korean stock holdings. Ireland was up 53.3 percent and Australia increased 48.5 percent.
As for stocks, foreign investors made net purchases of 22.89 trillion won in listed shares last year, down from 23.53 trillion won in 2009, but foreigners made net purchases of 14.439 trillion during the four months from September to December 2010, representing 63.1 percent of total net purchases made in 2010 on the back of expectations for better domestic corporate earnings and abundant global liquidity, the FSS noted.
U.S. investors purchased listed Korean shares worth 1.66 trillion won in December to total 14.912 trillion during the year, representing 65.1 percent of the total overseas fund inflow, followed by China and the Netherlands.
China increased net purchasing significantly from 316.3 billion won in November to 508.5 billion won in December to total 979.9 billion won, while Dutch investment in Korean securities grew from 70.1 billion won to 473.2 billion won during the citied period.
The FSS said that Saudi Arabia, Japan and the United Kingdom were net sellers in December, as they sold 115.9 billion won, 133 billion won and 330.1 billion won worth of shares, respectively, last month.
In contrast, overseas ownership of Korean bonds lost ground last year after foreigners swung to net selling, curbing a two-month buying run.
Overseas investments recorded net outflows of 5.302 trillion won in December, the largest monthly net outflows in 2010. It was also a record monthly high since 1998 when the bond market was first open to foreign investments, beating the previous high of 5.167 trillion won set in October 2008 immediately after the Lehman Brothers collapse.
The FSC said that such huge net outflows were due to position adjustments ahead of the year-end, strong dollar trend, continued worries over European sovereign risk and the passage of the bill on taxes on foreign investors’ purchases of bonds on Dec. 8, 2010.
In the standings for holdings in bonds, the United States was the largest holder with 15.21 trillion won, followed by Thailand with 14.87 trillion won and Luxembourg with 11.65 trillion won.