In February, foreign funds invested in domestic securities resulted in a net inflow of 1.73 billion dollars. While there was a net outflow of 1.81 billion dollars from the stock market, there was a shift to a net inflow in the bond market. On the 11th, the KOSPI index fell by 53.79 points (2.09%) to 2,516.60.
Foreign investors have been withdrawing funds from the domestic stock market for seven months, with global investment sentiment in the semiconductor sector waning and threats of tariffs by U.S. President Donald Trump affecting this trend. According to the Bank of Korea on the 12th, foreign investments in domestic securities saw a net inflow of 1.73 billion dollars last month, marking a shift to a net inflow for the first time in six months since August last year.
Foreign stock investments continued their net outflow streak, with 1.81 billion dollars of foreign capital exiting the domestic stock market last month, surpassing the net outflow recorded in January this year (-510 million dollars). In current exchange rates, this amounts to 2.6 trillion won. The scale of net outflow in stock funds was smaller than last December’s (-2.58 billion dollars) emergency state situation.
The Bank of Korea stated that the persistent net outflow in stock funds was due to the weakened investment sentiment in the semiconductor sector from the shock of China’s low-cost AI chip announcement and the U.S. tariff measures. The overall net inflow from foreign funds was due to bonds rather than stocks.
Foreign investments in bonds recorded a net inflow of 3.54 billion dollars last month, reverting to an influx after three months. This marked a recovery to the levels seen from September (3.04 billion dollars) to October (4.05 billion dollars) last year, overcoming the net outflows recorded in December (-1.28 billion dollars) and January (-1.27 billion dollars) of this year.
A net outflow means that more foreign capital has exited the domestic securities market than entered. The Bank of Korea explained that “for bond funds, the expansion of incentives for short-term arbitrage trading and sustained demand for medium to long-term bonds resulted in a substantial shift to net inflows.”