Korean investment in overseas securities increases for 4 straight years

By Nam Hyun-woo

The amount of foreign securities possessed by Korean institutional investors stood at $125.3 billion at the end of 2015, up $27.3 billion from a year earlier, Bank of Korea (BOK) data showed Thursday.

According to the data, the value has increased for four consecutive years and the 2015 surge, up 27.9 percent from 2014, was the steepest since 2007 when the amount increased $61.1 billion after the government first launched a policy aimed at invigorating foreign investment.

Foreign securities include overseas bonds, stocks, Korean paper, meaning shares and bonds denominated in foreign currency issued by the Korean government, and companies in overseas markets.

The 2015 surge was led by a jump in overseas securities held by insurance companies. The amount of foreign securities held by insurers here stood at $57.8 billion at the end of 2015, up $16 billion from 41.7 billion a year earlier. It accounted for some 58.7 percent of the overall surge in 2015.

At the end of 2014, foreign securities held by asset management firms accounted for the most of the overall surge, but insurers last year made bigger investments as they were seen as being more stable, according to the BOK.

“The surge was led by insurance companies which expanded their investment in stable foreign bonds amid the domestic low interest rate,” an official at the BOK said.

The total amount of overseas bonds held by Korean institutions showed a noticeable increase. At the end of 2015, it stood at $52.37 billion, up $17.4 billion or 49.7 percent from a year earlier. The $17.4 billion increase was largely attributed by insurance companies, whose amount of overseas bonds increased $12.7 billion from 2014.

Korean paper also showed a $5.5 billion increase from a year earlier in 2015. The amount of foreign securities, however, showed a relatively small $4.4 billion jump because of a downturn in stock prices in the global market, the BOK said.