Foreign holdings of domestic stocks push up Korea's financial liabilities

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Korea Times graphic by Cho Sang-won

A surge in Korean stocks boosted the value of local equities held by foreign investors, swelling the nation's financial liabilities and pushing net financial assets lower for the first time in five years, data showed Wednesday.

Net financial assets fell 20.4 percent to 1,271 trillion won ($858 billion) in 2025, a decline of 326 trillion won from a year earlier, according to the national balance sheet released by the Bank of Korea (BOK) and the Ministry of Data and Statistics. It was the biggest drop since the data series began in 2009.

Net financial assets are calculated by subtracting financial liabilities, which include Korean equities held by foreign investors, from financial assets, which include overseas assets held by Korean residents.

While financial assets rose by 2.79 quadrillion won, or 11.4 percent, to 27.318 quadrillion won, financial liabilities climbed by a larger 3.12 quadrillion won, or 13.6 percent, to 26.047 quadrillion won.

"The won-denominated increase in the value of Korean equities held by foreign investors exceeded the increase in overseas equities held by Korean residents," the central bank said.

KOSPI jumped 75.6 percent last year, outpacing major overseas benchmarks. The S&P 500 gained 16.4 percent, while Europe's Euro Stoxx 50 advanced 18.3 percent.

The trend contrasted with 2024, when overseas stock investments and a stronger dollar helped drive gains in net financial assets and national net worth. The BOK expects further gains in Korean stocks this year to boost the value of foreign investors' holdings and add to the country’s financial liabilities.

"Domestic stocks have continued to outperform overseas markets in the first half of this year," said Nam Min-ho, team head of the central bank. "If the trend persists through year-end, net financial assets may continue to decline in next year's national balance sheet."

"As a weaker won tends to boost net external financial assets, the year-end outcome will hinge on the relative moves in stock prices and the exchange rate," he added.

Korea's national net worth was estimated at 24.561 quadrillion won at the end of 2025, up 531 trillion won, or 2.2 percent, from a year earlier.

Nonfinancial assets led the increase, rising by 857 trillion won, or 3.8 percent, to 23.291 quadrillion won in 2025. Real estate accounted for 76.6 percent of the total, at 17.836 quadrillion won. The BOK said the government's property measures had little impact on residential land prices, as home-price gains remained elevated even after the measures were announced.