Increase in Domestic Overseas Investment... Last Year, Net External Financial Assets Surpassed 500 Billion USD

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Last year, South Korea's net external financial assets increased for the second consecutive year, reaching an all-time high at the end of the year. The direct causes were the rise in overseas stock investments by domestic investors and the increase in stock prices in major countries.

According to the "2019 Year-End International Investment Position (Provisional)" released by the Bank of Korea on the 20th, South Korea's net external financial assets increased by $64.8 billion to $500.9 billion, marking an all-time high at the end of the year. Net external financial assets are calculated by subtracting external financial liabilities from external financial assets, and as of the end of September last year, it surpassed $500 billion for the first time.

External investment (external financial assets) increased by $153.4 billion from the previous year to $1.6997 trillion. External financial liabilities, which represent foreign investment in the domestic market, rose by $88.6 billion to $1.1988 trillion.

The balance of external investment grew due to increased overseas stock investments by domestic investors and rising U.S. stock prices. Foreign investment in the domestic market also expanded in scale.

Among external financial liabilities, external debt excluding stocks and derivative financial instruments was $467 billion, up $25.8 billion from a year earlier. This also marked an all-time high at the end of the year. Of this, short-term external debt with maturities under one year increased by $8.9 billion, and long-term external debt rose by $16.9 billion.

With a slight increase in short-term external debt, the ratio of short-term external debt to reserve assets rose by 1.8 percentage points from a year earlier to 32.9%. This ratio had surged to 73% at the end of 2008 during the global financial crisis but had fallen to the low 30% range before recently rising again. The proportion of short-term external debt to total external debt increased by 0.3 percentage points to 28.8%.