Foreign investors sell South Korea bonds, stocks in Sept

SEOUL: Foreign investors offloaded a small amount of South Korean bonds in September, with selling by European funds offsetting buying by Asian investors, and also remained sellers of local stocks, data showed on Wednesday.

Foreign investors sold a net 2.5 billion won ($2 million)worth of listed South Korean bonds last month, posting their first net outflow since January, when they unloaded a net 441.7 billion won, the regulatory Financial Supervisory Service said.

Britain and France topped the list of sellers, continuing their selling binge for a third consecutive month, which could reinforce fears of the deepening debt crisis in Europe sparking fund withdrawals from South Korea.

By contrast, Thailand-based funds, which led foreign buying of South Korean bonds between 2009 and 2010, turned net buyers in September. Investors from Malaysia and China also expanded their holdings.

European funds continued to cash in Seoul equities, accounting for 75 percent of foreign investors' total net stock sales of 1.3 trillion won in September.

On the year to September, European investors, led by France, dumped one-tenth of their South Korean equities holdings, selling a net 12 trillion won in aggregate.

China and Hong Kong were the only two offshore investors that remained net buyers in South Korean stock markets since the start of this year. The United Arab Emirates emerged as the biggest foreign buyer in September.

With concerns about Europe's debt issues and the fragile global economy growing, the KOSPI index lost 5.9 percent in September, making it one of the hardest-hit globally.

Yields on major South Korean government bonds jumped 15-40 basis points by the end of September after hitting multi-year lows earlier in the month, led by longer-end maturities on heavy selling from foreign investors.

Foreign investor purchases of monetary stabilisation bonds in September roughly corresponded to their selling of treasury bonds during the same period, data from the agency showed.

They owned 85.1 trillion won of listed South Korean bonds at the end of September, accounting for 7.2 percent of the total, and held 339.0 trillion won in Seoul shares.