(Overview)

Foreign investors’ net purchases in listed Korean shares increased KRW0.1 trillion and net investments in listed Korean bonds decreased KRW3.9 trillion in December 2011, resulting in the decline of KRW3.8 trillion in net investments in listed Korean securities.

As of end-December 2011, foreigners held KRW351.5 trillion in listed stocks for 30.4% of total market capitalization and KRW83.0 trillion in listed bonds for 6.9% of total listed bonds, resulting in total holdings of KRW434.5 trillion in listed securities.

(Stock Investments)

Foreign investors made net purchases of KRW0.1 trillion in December 2011 as they remained on the sidelines amid continued uncertainty on global debt crisis.

Net sales by European investors significantly decreased compared with the previous month while net sales by U.S. investors increased.

Foreign investors made net purchases of KRW0.6 trillion in Korean stocks despite the news of North Korean leader Kim Jong-Il’s death on December 19, riding on strong U.S. economic data.

Cumulatively in 2011, foreigners turned around into net sales of KRW9.6 trillion from net purchases of KRW22.9 trillion made in 2010. Since August, foreign investors have made net sales of KRW9.3 trillion.

In December 2011, Singapore and Canada made net purchases while Cayman Islands and the U.S. made net sales.

Cumulatively in 2011, the U.S. and Singapore made net purchases of KRW5.2 trillion and KRW3.1 trillion, respectively, while the U.K. and Cayman Islands made net sales of KRW6.3 trillion and KRW3.6 trillion, respectively.

The U.S. held KRW144.1 trillion of stocks as of end-December 2011, accounting for 41.0% of total foreign stock holdings, followed by the U.K. with KRW37.9 trillion or 10.8%.

Holdings by most countries decreased as investors sold stocks to secure liquidity and the stock prices fell compared with the end of 2010, while holdings by China and Singapore increased.

(Bond Investments)

In December 2011, foreigners’ net investments in listed Korean bonds decreased KRW3.9 trillion due to a massive maturity redemption of KRW6.4 trillion but the net buying trend continued with KRW2.5 trillion in net purchases.

Net investments by European and U.S. investors decreased more sharply in December as bonds redeemed at maturity did not lead to reinvestment.

Cumulatively in 2011, foreigners made net investments of KRW7.1 trillion, down KRW9.8 trillion from KRW16.9 trillion in 2010.

In December 2011, net investments by Kazakhstan and Hong Kong increased from the previous month while net investments by the US, Luxemburg and Thailand decreased.

Cumulatively in 2011, China and Malaysia made net investments of KRW3.7 trillion, respectively, while Thailand and France saw a decline in net investments by KRW5.1 trillion and KRW2.7 trillion, respectively.

Foreigners held KRW83.0 trillion as of end-December 2011, down for the first time during the year.

The US held KRW16.4 trillion in Korean bonds as of end-December 2011, accounting for 19.7% of total bonds held by foreigners.
Holdings by the US, Luxemburg and China increased from the previous year, despite the global debt crisis.

* Government press release (January 5)