[Asia Economy Reporter Seo So-jeong] Due to the rise in U.S. stock prices and the overseas stock investment craze among Seohak Gaemi (Korean investors in foreign stocks), the balance and increase of investments in the U.S. recorded the highest ever since statistics compilation began in 2002.
According to the "2021 Regional and Currency International Investment Position (Provisional)" released by the Bank of Korea on the 28th, as of the end of last year, Korea's external financial asset balance excluding reserve assets was $1.7153 trillion, an increase of $177.8 billion compared to the end of 2020. External financial assets refer to the amount Koreans have invested in foreign financial products or companies' direct investments overseas.
Reserve assets ($463.1 billion) were excluded from the balance in this statistic, following international conventions that do not disclose reserve asset management details in the international investment position.
By investment region, the largest investment was in the U.S. at $675 billion (39.4%), followed by the European Union (EU) at $236 billion (13.8%), and Southeast Asia at $214.9 billion (12.5%).
In particular, the U.S. investment balance increased by $141.8 billion in one year, setting a record high for both balance and increase.
Yoo Bok-geun, team leader of the Overseas Investment Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "The investment balance in the U.S. significantly increased due to residents' expanded securities investment in the U.S. and the rise in U.S. stock prices," adding, "Investment balances in the EU and China also increased by $11.5 billion and $8.9 billion, respectively."
Breaking down the U.S. investment balance by type, securities investment was the largest at $456.8 billion, followed by direct investment at $143.8 billion and other investments at $71.4 billion.
The external financial liabilities balance, which refers to the amount foreigners or companies have invested in Korean financial products or direct investments, was $1.5188 trillion at the end of last year, an increase of $25.5 billion compared to the previous year.
By investment region, the U.S. was the largest at $386.2 billion (25.4%), followed by Southeast Asia at $323.9 billion (21.3%) and the EU at $251.5 billion (16.6%).
Compared to the end of the previous year, investment balances increased in Southeast Asia (+$35.7 billion) and China (+$5.7 billion), but decreased in the U.S. (-$17.7 billion) and Japan (-$5.1 billion). Team leader Yoo said, "In Southeast Asia, bond investments by sovereign wealth funds and central banks increased, marking the second-largest increase ever," and added, "The decrease in the U.S. investment balance compared to the previous year was due to non-transaction factors such as the depreciation of the Korean won against the U.S. dollar."
As of the end of last year, Korea's external financial assets by currency were led by U.S. dollar-denominated financial assets at $1.056 trillion (58.6%), followed by the euro at $168.7 billion (9.8%) and the Chinese yuan at $121 billion (7.1%).
Team leader Yoo stated, "Compared to the end of the previous year, the investment balance in U.S. dollars increased significantly by $143.6 billion, reaching an all-time high," and added, "Investment balances in the Chinese yuan and British pound also increased by $10.7 billion and $6 billion, respectively."
Among external financial liabilities, Korean won-denominated financial liabilities were the largest at $1.0456 trillion (68.8%), followed by U.S. dollars at $368.4 billion (24.3%) and euros at $36.5 billion (2.4%).
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