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Foreigners jack up Korean bond exposure this year

Finance 08:39 May 11, 2020

SEOUL, May 11 (Yonhap) -- Foreign investors have ramped up their investment in South Korean bonds this year amid the country's relatively favorable economic conditions, data showed Monday.

Offshore investors held 140.9 trillion won (US$115 billion) worth of listed government and corporate bonds as of end-April, up 17 trillion won from the end of last year, according to the data from the Financial Supervisory Service.

It marks the first time that foreigners' holdings of South Korean bonds have surpassed the 140 trillion-won mark.

Despite the global financial turmoil sparked by the coronavirus outbreak, offshore investors snapped up South Korean bonds worth 7.4 trillion won in March and 9.3 trillion won in April.

Foreigners' increased exposure to South Korean bonds contrasts with their pullout from the local stock market over the cited period.

Foreigners jack up Korean bond exposure this year - 1

Offshore investors pulled 12.5 trillion won and 4.1 trillion won out of the local equity market in March and April, respectively.

It also compares with international investors' exit from emerging markets this year. In the first four months of the year, foreigners withdrew some $41 billion from emerging market bond funds, according to the Korea Center for International Finance.

Experts said offshore investors have been loading up on South Korean bonds, driven by the country's sold economic fundamentals and relatively high interest rates.

Standard & Poor's Global Ratings grants an "AA" long-term sovereign credit rating on South Korea, the same as that on Britain, France and Belgium.

In early April, the Bank of Korea (BOK) froze its policy rate at 0.75 percent amid a grim growth outlook due to the COVID-19 outbreak.
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