[Click eStock] "Increase in UK Capital Share in Domestic Stock Market... Need for Enhanced Risk Management"

First Half Net Purchase Volume, Second Only to the US
UK Share Increased from 9.0% to 9.5% in Six Months
"Need for Risk Management of UK-Based Funds Also Rising"

In the first half of 2024, foreign investors net purchased a total of 22.8 trillion KRW in the domestic stock market, with the United States and the United Kingdom recording the largest net purchases by country.

On the 6th, Kim Hoo-jung, a researcher at Yuanta Securities, stated, "The scale of the UK’s net purchases of domestic stocks in 2024 is expected to reach the highest level since 2010 on an annual basis. This could increase the need for risk management of UK-based funds. Meanwhile, the US has been steadily buying 2 to 3 trillion KRW worth of domestic stocks every month since February this year, reflecting a positive stance of American investors toward domestic stocks."

According to Yuanta Securities Research Center, the US purchased 13.7 trillion KRW and the UK 11 trillion KRW worth of domestic stocks in the first half of the year. Notably, the UK also net purchased 5.7 trillion KRW in November and December last year, showing strong interest with a total net purchase of 16.6 trillion KRW from November last year to June this year. The UK’s share among foreign investors was 9.0% in October last year but increased to 9.5% in June this year.

On the other hand, Saudi Arabia, Canada, and Singapore showed net sales of domestic stocks since the beginning of the year. In the global fund market, inflows into emerging market equity funds began to reverse from the end of July. Emerging market equity funds, which had continuous net outflows until the first quarter, saw a decrease in net outflows from the second quarter and turned to net inflows in the last week of July. However, with increased volatility in global financial markets from the first week of August, there is a possibility that the scale of capital outflows from emerging market-related equity funds may increase going forward.

The US has various institutional investors such as pension funds, mutual funds, insurance companies, and hedge funds investing from a long-term perspective. In particular, the influence of pension funds and mutual funds is growing, maintaining a stable investment flow. Investor sentiment toward US stocks has been gradually improving through the second quarter, and there is a pattern of increasing capital inflows into US stock exchange-traded funds (ETFs).

Researcher Kim said, "In the first half of 2024, the active buying by the US and the UK in the domestic stock market stood out, and this trend is likely to continue in the second half. However, it is also necessary to closely monitor risk factors such as volatility in the global financial markets and the potential capital outflows from emerging market equity funds."