Net External Financial Assets at 904.2 Billion Dollars at End-2025
Overseas Securities Investment Expands... External Financial Assets Up 362.6 Billion Dollars
Foreign Investment in Korea Rises Even Faster... External Financial Liabilities Up 560.4 Billion Dollars
Our country’s net external financial assets (external financial assets minus external financial liabilities), which show Korea’s capacity to meet external payment obligations, decreased for the first time in five years. While external financial assets rose sharply on the back of overseas stock investment led by so-called “Seohak Ants” (Korean retail investors investing abroad), external financial liabilities increased by an even larger margin as foreign investors expanded their investment in Korean securities amid a steep rise in domestic stock prices.
According to the “2025 International Investment Position (Preliminary)” released by the Bank of Korea on February 25, Korea’s net external financial assets stood at 904.2 billion dollars at the end of last year, down 197.8 billion dollars from 1,102.0 billion dollars at the end of 2024. This is the first decline in five years since 2020. After turning to an increase to 685.3 billion dollars in 2021, net external financial assets had grown every year to 800.5 billion dollars in 2022, 805.1 billion dollars in 2023, and 1,102.0 billion dollars in 2024.
This was because external financial liabilities, which represent foreign investment in Korea, increased more than external financial assets, which represent Koreans’ investment abroad. External financial assets posted a record-high annual increase of 362.6 billion dollars, as residents’ overseas securities investment expanded and valuation gains grew thanks to strong global stock markets. However, external financial liabilities rose by an even larger record-high 560.4 billion dollars, as foreign investors increased not only their equity investment but also their bond investment in Korea amid a sharp rise in domestic stock prices, leading to a decline in net external financial assets.
In detail, Korea’s external financial assets balance came to 2,875.2 billion dollars as of the end of last year, the largest amount on record. Compared with the end of 2024, it increased by 362.6 billion dollars, also marking the largest increase ever.
The biggest contributor to this increase was residents’ overseas securities investment. Overseas securities investment rose by 271.9 billion dollars from a year earlier to 1,266.1 billion dollars. Specifically, equity securities reached 977.1 billion dollars as U.S. stock prices climbed and overseas stock buying intensified, while debt securities (289.0 billion dollars) increased by 38.3 billion dollars as overseas bond investment continued on expectations of U.S. interest rate cuts.
Direct investment amounted to 828.9 billion dollars at the end of last year. It increased by 66.2 billion dollars from the end of the previous year, as investment continued mainly in the automobile and secondary battery sectors.
Other investment, centered on cash and deposits, increased by 21.9 billion dollars to 316.1 billion dollars at the end of last year. Reserve assets, which represent the total amount of foreign exchange reserves, stood at 428.1 billion dollars, up 12.5 billion dollars, as the dollar-converted value of equity holdings and foreign-currency assets denominated in currencies other than the dollar increased.
The balance of external financial liabilities reached 1,971.0 billion dollars at the end of last year, up 560.4 billion dollars. This is the largest annual increase on record.
The rise was driven by foreign investment in Korean stocks. Non-residents’ securities investment balance amounted to 1,354.9 billion dollars, up 520.0 billion dollars in one year. Due to the rise in domestic stock prices, equity securities increased by 458.7 billion dollars, exerting the greatest impact on the increase in external financial liabilities. Foreign investors also expanded their bond investment, mainly in long-term bonds, pushing up debt securities by 61.3 billion dollars over the same period. The balance of foreign direct investment stood at 315.3 billion dollars, up 28.3 billion dollars over the same period.
As foreign investment in Korea surged, indicators of external debt soundness and external payment capacity somewhat deteriorated, but the Bank of Korea assessed that they remain at a sound level.
The ratio of short-term external debt to reserve assets, which indicates external debt soundness, was 41.8%, up 6.6 percentage points from 35.3% at the end of the previous year. The share of short-term external debt in total external debt, which indicates external payment capacity, rose from 21.8% to 23.3% over the same period, an increase of 1.6 percentage points.
Moon Sangyoon, Head of the External Investment Statistics Team at the Economic Statistics Department 1, said, “This is mainly due to an increase in short-term external debt driven by higher demand for investment in Korean securities,” adding, “Short-term bond investment and cash and deposits by foreigners contributed significantly to the increase in short-term external debt, and in the case of cash and deposits, a considerable portion was identified as funds secured by branches of foreign banks in Korea for domestic securities investment.”
He added, “Given that both indicators remain within their recent ranges of fluctuation, we judge that Korea’s external payment capacity and external debt soundness are both at sound levels.”
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