Foreign Stock Ownership Plummets to 14-Year Low

Foreigners own fewer Korean stocks than at any time in the last 14 years as the country's economy stagnates. Foreigners mainly invest in Korean blue chips, and their performance has been lackluster lately.

According to the Financial Supervisory Service last Friday, foreign investors sold W1.18 trillion worth of Korean stocks last month rattled by China's property crisis, but the value of their shareholding declined by W22.7 trillion (US$1=W1,333). That meant foreigners owned only W679.1 trillion worth of Korean stocks as of the end of last month, accounting for 26.1 percent of total market capitalization and the lowest since April 2009, just after the global financial crisis. 

The high was on Aug. 4, 2004 when total foreign ownership stood at 42.3 percent of the Korean bourse.

Samsung Electronics shares, the favored stock among foreign investors with holdings of W212 trillion, plunged six percent in August, while Hynix, whose foreign holdings stood at W27 trillion, fell 2.6 percent.

Foreign investors also cashed in rechargeable battery stocks, which have recently rallied despite the bourse's overall mediocre performance.

"Foreigners bought shares of battery materials group Eco Pro, last month but sold EcoPro BM, POSCO Holdings, Samsung SDI and other rechargeable battery shares," an FSS spokesman said. "As a result, the total ownership proportion of foreigners in the domestic stock market appears to have declined."