Seoul: Foreign investors sold the largest value of South Korean stocks and bonds in about five years in December amid political turmoil sparked by now-suspended President Yoon Suk Yeol's martial law declaration, central bank data showed Wednesday.
According to Yonhap News Agency, offshore investors sold a net US$3.86 billion worth of local stocks and bonds last month, marking the largest amount since March 2020, when the country was hit by the COVID-19 pandemic. The data from the Bank of Korea (BOK) revealed that foreigners' Korean stock selling amounted to $2.58 billion in December, continuing a five-month trend of outflows.
In addition to stocks, foreign investors also offloaded $1.28 billion worth of Korean bonds following their net purchase of $810 million in November, the data showed. A BOK official stated, "Concerns linger over the prospect for domestic semiconductor companies. Uncertainties over domestic politics and interest rate cuts in major economies also affected investor sentiment."
The data further indicated a sharp decline in the Korean currency, which fell to 1,472.5 won against the U.S. dollar in December from November's 1,394.7 won. The daily fluctuation of the dollar-won exchange rate increased to an average of 5.3 won last month from 4.7 won in November. The BOK attributed the won's weakening to strong U.S. economic data and the ongoing political turmoil in South Korea.
The political chaos was highlighted by the National Assembly's recent vote to impeach President Yoon following his unexpected and short-lived declaration of martial law, which awaits a final court ruling. Investigators are actively working to detain Yoon as an extensive probe into the incident continues.