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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Foreign investors offloaded more than $9.3 billion worth of South Korean stocks last month, marking the ninth consecutive month of net selling and the longest streak since the 2008 global financial crisis.
According to the “Trends in International Financial and Foreign Exchange Markets – April 2025” report released by the Bank of Korea on May 16, net outflows from foreign investment in Korean securities totaled $1.7 billion in April, or approximately 2.36 trillion won. This marks a reversal from February and March, which had seen net inflows of $1.73 billion and $3.67 billion, respectively.
The significant pullback was led by equities. Foreign net outflows from the Korean stock market amounted to $9.33 billion in April, a sharp increase from the $1.16 billion recorded in March. This represents the largest monthly equity outflow since March 2020, during the height of the COVID-19 pandemic, when $11.04 billion exited the market. Cumulatively, foreign equity outflows for 2025 have exceeded $12.81 billion.
The Bank of Korea attributed the exodus to deteriorating global investor sentiment following the announcement of retaliatory tariffs by the United States.
In contrast, South Korea’s bond market remained resilient. Foreign investors posted a net inflow of $7.63 billion into Korean bonds in April, marking the third consecutive month of net buying. The central bank cited attractive arbitrage opportunities and continued demand for medium- to long-term bonds as key drivers.
Meanwhile, South Korea’s 5-year sovereign credit default swap (CDS) premium—a measure of credit risk—rose to a monthly average of 37 basis points (bp) in April, up from 33bp the previous month. Volatility in the foreign exchange market also increased, with the average daily fluctuation in the won-dollar exchange rate rising to 9.7 won (0.67%) from 4.3 won (0.29%) in March.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
