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Net inflows of foreign funds near US$116 bln over past 4 years

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(Globalpost/GlobalPost)

SEOUL, June 21 (Yonhap) -- Net inflows of foreign stock and bonds funds into South Korea were estimated to reach around US$116 billion over the past four years as foreigners snapped up Korean assets amid global monetary easing moves, data showed Friday.

Foreign investors have remained net buyers of Seoul stocks and bonds for four years since 2009 when net inflows of such funds amounted to $49.7 billion, according to data by the central bank.

In 2008 when Korea was in the midst of the global financial crisis, the account of stock and bond investment or portfolio investment by foreign investors reached a net outflow of $2.4 billion, hit by their fund withdrawal.

Quantitative easing moves by advanced economies have led massive cheap money to flow into emerging countries, raising risks of asset bubbles and putting upward pressure on emerging currencies.

But now emerging countries are concerned about a possible sudden reversal of such capital inflows as the Federal Reserve said it could start taping its bond-purchasing stimulus later this year.

South Korea is sensitive to cross-border capital flows as Asia's fourth-largest economy underwent massive capital flight and the won's sharp weakness to the U.S. dollar whenever a financial crisis occurred.

In the January-April period, the account of portfolio investment logged a net outflow of $7.69 billion, compared with a net inflow of $12.94 billion for the same period of 2012.

But Korea posted a current account surplus for the 15th straight month in April with the combined surplus reaching $13.94 billion in the first four months of this year.

The government said they are closely watching global fund movements, noting that it has already mapped out plans to effectively respond to any future developments.

Foreigners' holdings of stocks and bonds listed on the Seoul markets reached 512.7 trillion won ($442.9 billion) as of end-May, up 146 percent from the end of 2008, according to data by the financial watchdog.

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