Foreign investors pulled $4.5 billion out of South Korea's stock and bond markets last month, marking a seventh straight month of net outflows. The outflow narrowed to about a fifth of July's level, however, and equity funds swung to a net inflow for the first time in eight months.
Foreign portfolio investment in South Korean securities recorded a net outflow of $4.5 billion last month, according to a report on international finance and foreign exchange market trends released by the Bank of Korea on the 17th. Outflows have continued for seven months since February, but the scale shrank by $17.15 billion from July, when $21.65 billion left the market. Cumulative outflows from January through August reached $127.08 billion.
Equity funds swung to a net inflow of $40 million on a settlement-date basis, halting an outflow trend that had run for eight months since December of last year. In July, $20.7 billion had flowed out.
The central bank said geopolitical tensions in the Middle East and rising global long-term interest rates weighed on investor sentiment, while solid earnings at U.S. technology companies helped drive the shift to inflows. On a transaction-date basis, however, the net outflow of equity funds actually widened, leaving the trend split depending on the method of calculation.
Bond funds posted a net outflow of $4.53 billion. Funds left the market for a second consecutive month after July's net outflow of $960 million, and the size of the outflow grew. A deepening reversal in short-term arbitrage incentives and rising market interest rates were cited as the main causes.
