‘Expectations for semiconductors and value industries’… Foreigners put money into domestic stocks and bonds for the sixth consecutive month

On the 2nd of May, at the Korea Exchange in Yeouido, Seoul, Chairman Jung Eun-bo delivered welcoming remarks at the 2nd seminar on supporting corporate value-up initiatives for the advancement of the Korean stock market. Foreign investors poured a net total of $4.03 billion into the domestic securities market last month due to optimism surrounding the recovery of the semiconductor industry and the government’s corporate value-up program. This marks the sixth consecutive month of net inflows. According to a report on international finance and foreign exchange markets released by the Bank of Korea on the 10th, foreign investment in domestic securities amounted to a net inflow of $4.03 billion last month, indicating that foreign investors invested more money in Korean stocks and bonds than they withdrew from the market. The influx of foreign securities investment has been ongoing since November last year, with a total of $19 billion pouring in during this period. In April, $1.92 billion and $2.12 billion in net inflows were recorded for stocks and bonds, respectively. The Bank of Korea attributed this continued influx to expectations of global economic recovery amidst concerns of delayed rate cuts by the U.S. Federal Reserve and geopolitical risks in the Middle East. Yoon Seung-wan, a manager at the Bank of Korea’s Capital Analysis Team, stated that the main factors driving the sustained influx of foreign investment are expectations of a semiconductor industry recovery and the government’s value-up program. He noted that since the announcement of the value-up program, foreign investments that were previously focused on the semiconductor sector have diversified into low PBR (Price-to-Book Ratio) stocks. In March, bond funds saw a net outflow of $3.39 billion, but this trend reversed in April, contributing to the overall growth of net inflows. Bond investments shifted towards long-term bonds following a period of substantial maturity, leading to a net inflow trend. The USD/KRW exchange rate experienced significant fluctuations due to uncertainties surrounding the U.S. Federal Reserve’s rate cuts, escalating tensions in the Middle East, and depreciation of the Japanese yen. However, following the recovery of investor sentiment post FOMC, the rate of increase in the USD/KRW exchange rate narrowed in April to 0.4%, maintaining a level similar to the previous month. Last month, the USD/CNY rate rose, while the USD/JPY rate fell.