East Asia Draws Global Investors but Japan Loses Out
Global funds are flowing into traditional exporters Korea, China and Taiwan, but Japan is still groaning under a recession and capital flight abroad.
Some US$1.1 billion of foreign investment came to Korea this year, $450 million in the first half and $660 million in the second. Foreigners bought W32 trillion (US$1=W1,184) of stocks in Korea. Kim Se-jung, a researcher at Shinyoung Securities, said "Korea successfully coped with the global economic crisis because there are many globally competitive companies that are favored by foreign investors such as Samsung Electronics, POSCO and Hyundai Motor."
These attracted investment because they managed to increase their market dominance even during the crisis. The fact that the Korean stock market was promoted to "developed market" status by the Financial Times Stock Exchange index also fostered more foreign investment.
Taiwan saw $1.125 billion of foreign investment in the first half, more than double Korea's, but $955 million left the country in the second half, leaving a net influx of $170 million. China attracted a massive $5.6 billion of global fund this year.
That capital is leaving Japan is due to the strong yen, which has caused Japan to lose its competitive edge in exports, said Yu Su-min, a researcher at Hyundai Securities. "Combined with falling domestic demand, that sent a lot of foreign investment fleeing the country."