Q3 Institutional Overseas Securities Investment Decreased by $5.9 Billion... "Impact of Interest Rate Hikes and Stock Price Declines"

Trading floor of the New York Stock Exchange, USA
[Image source=Yonhap News]

In the third quarter of this year, due to rising interest rates in major countries and falling stock prices, the balance of overseas foreign currency securities investments by domestic institutional investors decreased by 5.9 billion dollars.

According to the "Trends in Foreign Currency Securities Investment by Major Institutional Investors in the Third Quarter" announced by the Bank of Korea on the 1st, the balance of foreign currency securities investments by major domestic institutional investors (based on market value) stood at 367.55 billion dollars as of the end of September, down by 5.9 billion dollars.

This marks the first quarterly decrease in the balance of overseas foreign currency securities investments by domestic institutional investors in one year since the third quarter of last year (-18.56 billion dollars).

The Bank of Korea explained that the decrease in the balance was due to "rising interest rates in major countries, falling stock prices, and depreciation of major currencies against the US dollar."

By type of institutional investor, asset management companies and insurance companies decreased by 3.04 billion dollars and securities companies by 570 million dollars, while foreign exchange banks increased by 750 million dollars.

By product, foreign bonds saw the largest decrease of 3.28 billion dollars. This was mainly due to significant declines centered on insurance companies (-2.81 billion dollars) caused by valuation losses from rising interest rates in major countries.

Foreign stocks decreased by 1.54 billion dollars, mainly among asset management companies (-1.76 billion dollars), due to losses from falling stock prices in major countries and depreciation of major currencies against the US dollar.

Foreign currency-denominated securities issued overseas by domestic financial institutions or companies (Korean paper) decreased by 1.07 billion dollars.