Last Year, South Korea's External Financial Assets Increased by 172 Trillion Won... Surge in US Investments

Wall Street Sign (Asia Economy = Yonhap News)

As investments centered on the United States increased, South Korea's external financial assets rose by $124.4 billion (172.4 trillion KRW) compared to the previous year.

According to the Bank of Korea's "2023 Regional and Currency International Investment Position" released on the 25th, South Korea's external financial assets balance, excluding reserve assets, stood at $1.9116 trillion at the end of last year, an increase of $124.4 billion from the end of the previous year. External financial assets refer to overseas financial assets held by South Korean nationals.

By investment region, the largest amount was invested in the United States at $804.6 billion (42.1% share). The increase in investment balance in the U.S. was $113.8 billion, marking the second-largest increase ever.

A Bank of Korea official stated, "The rise in the U.S. stock market led to increased investment by the public in U.S. securities, and investments by major domestic companies such as Samsung and LG in overseas factories in the U.S. also contributed."

Following the U.S., the EU ($252.8 billion, 13.2%) and Southeast Asia ($248.5 billion, 13.0%) ranked next. Compared to the end of the previous year, investment balances in the U.S. and EU (+$10.3 billion) increased, while those in China (-$9.1 billion), the Middle East (-$4.2 billion), and Southeast Asia (-$4.0 billion) decreased.

By investment type, direct investment was highest in the U.S. ($211.1 billion, 29.1%) and Southeast Asia ($155.2 billion, 21.4%), securities investment was highest in the U.S. ($507.5 billion, 59.2%) and EU ($123.9 billion, 14.4%), and other investments were highest in the U.S. ($81.2 billion, 28.5%).

At the end of last year, South Korea's external financial liabilities balance was $1.5214 trillion, an increase of $111.6 billion from the end of the previous year. By investment region, the U.S. was the largest at $371.4 billion (24.4%), followed by Southeast Asia ($329.5 billion, 21.7%) and the EU ($246.0 billion, 16.2%).

The Bank of Korea analyzed that, compared to the previous year-end, investment balances increased in most regions except the Middle East and China due to the rise in domestic stock prices. By investment type, direct investment was highest in the EU ($74.7 billion, 25.8%), securities investment was highest in the U.S. ($295.0 billion, 30.9%), and other investments were highest in Southeast Asia ($81.4 billion, 35.7%).

External Financial Assets Are 59.2% in U.S. Dollars

South Korea's external financial assets (excluding reserve assets) by currency showed that U.S. dollar-denominated financial assets were the largest at $1.1315 trillion (59.2%) as of the end of last year. This was followed by the euro at $185.7 billion (9.7%) and the yuan at $108.6 billion (5.7%).

Compared to the previous year-end, investment balances increased in U.S. dollars (+$97.8 billion), euros (+$10.1 billion), and pounds (+$4.9 billion), but decreased in yuan (-$7.1 billion) and others.

By investment type, the U.S. dollar accounted for the largest share in all types: direct investment ($278.3 billion, 38.4%), securities investment ($607.0 billion, 70.8%), and other investments ($210.7 billion, 74.1%).

During the same period, external financial liabilities by currency showed that won-denominated financial liabilities were the largest at $999.3 billion (65.7%), followed by U.S. dollars at $392.7 billion (25.8%) and euros at $44.1 billion (2.9%).

Compared to the previous year-end, won-denominated liabilities increased significantly (+$121.8 billion) due to the rise in domestic stock prices. By investment type, won accounted for the largest share in direct investment ($242.4 billion, 83.8%) and securities investment ($731.5 billion, 76.5%), while U.S. dollars accounted for the largest share in other investments ($146.6 billion, 64.4%).