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Foreign holdings of S Korean bonds hit record high in July

08-03-2011 17:18 BJT

SEOUL, Aug. 3 (Xinhua) -- Foreign holdings of South Korean bonds hit record high in July as offshore investors snapped up local bonds due to expectations for the local currency's appreciation and heightened fiscal problems in advanced economies, a financial watchdog said Wednesday.

As of the end of July, foreign investments in local listed bonds amounted to 84.2 trillion won (79.4 billion U.S. dollars), or 7.2 percent of total ownership, the Financial Supervisory Service (FSS) said in a statement.

The record-breaking bond buying came as overseas investors scooped up local bonds on hopes for the South Korean won's ascent against the greenback and a stronger appetite for safe assets caused by heightened debt problems in advanced economies, the watchdog said.

Foreign net investments, calculated by net bond buying minus the amount of maturing debts, reached 2.9 trillion won as of end- July, sending their buying streak for the sixth consecutive month. Foreigners bought a net 10.1 trillion won worth of local bonds for the past six months.

By country, Thai investors turned to net buyers for the first time since June 2010 by purchasing a net 2.1 trillion won worth of local bonds. Thai investors were the third-largest holders of local bonds, following the United States and Luxembourg. Singaporean investors ranked No. 2 in July by picking up a net 604. 1 billion won worth of bonds, followed by Chinese investors with 260.6 billion won.

In contrast, French investors were the biggest sellers by dumping a net 568.1 billion won worth of local bonds, followed by Spanish investors with 124.1 billion won and Canadian investors with 66.7 billion won.

Meanwhile, foreign investors shifted to net buyers of local stocks in July from net sellers in May and June, according to the FSS.

Foreign investments in local listed stocks stood at 399.3 trillion won as of the end of July, or 30.2 percent of the total market capitalization. It was larger than 392.9 trillion won tallied for June.

The FSS said foreign net buying amounted to 2.2 trillion won during the entire period of last month as offshore investors raked in local stocks amid eased concerns over the European fiscal crisis.

However, overseas investors sold a net 1.7 trillion won worth of local shares in the latter half of July due to heightened worries about the U.S. debt limit and the fiscal crisis in Italy and Greece, the watchdog noted.

By country, French investors were the biggest net buyers in July by snapping up local shares worth 693 billion won. U.S. investors came next with 521.5 billion won, a turnaround from net sales worth 504.1 billion won a month earlier.

Editor:Wang Xiaomei |Source: Xinhua

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