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Foreign Investors Return to Korean Stocks After 7-Month Hiatus, While Bond Outflows Persist
Finance · Major Banks · yonhap_finance · 2026-09-17
Foreign investors shifted to net buying in Korean equities for the first time in eight months during August, even as bond market outflows continued.
What Happened
Foreign Capital Trends: Foreign investors recorded a net outflow of approximately $4.5 billion from the Korean securities market in August, marking the seventh consecutive month of net selling. However, the scale of this outflow was significantly reduced compared to the $21.65 billion recorded in July.
Equity Market Shift: Equity funds saw a net inflow of $35 million, marking the first positive movement in eight months. Despite geopolitical tensions in the Middle East and rising global interest rates, strong earnings from U.S. technology firms helped stabilize investor sentiment.
Bond Market Pressures: Bond funds experienced a net outflow of $4.53 billion, continuing the trend that began in July. The Bank of Korea attributed this to the reversal of short-term arbitrage incentives and rising domestic market interest rates.
Market Stability Indicators: The CDS premium for Korean government bonds remained stable at an average of 22bp, slightly lower than the previous month. Additionally, volatility in the KRW/USD exchange rate decreased, signaling a relative stabilization in the foreign exchange market.