Foreign funds are moving from Korea's stock market to the bond market. Foreign investors have been net sellers of stocks for five straight months and net investors in bonds for two straight months.
According to the "May 2026 foreign investor securities investment trends" released on the 26th by the Financial Supervisory Service, foreign investors last month were net sellers of 4.7019 trillion won in listed shares and net investors of 879.1 billion won in listed bonds, for a net withdrawal of 3.8228 trillion won in total.
Foreign investors have been net sellers for five consecutive months. The scale of foreign net selling was larger than in March (4.3505 trillion won), when the U.S.-Iran war broke out. The United States was the most aggressive seller by country, with net selling close to 2.9 trillion won. Norway recorded the largest net buying at 200 billion won.
However, holdings increased by 73.1 trillion won from the previous month to 2,852.3 trillion won. This is attributed to higher valuation amounts amid a bull run in the domestic stock market. The country with the largest holdings was the United States (1,188 trillion won), accounting for 41.7% of all foreign investors. Europe (903.9 trillion won) and Asia (397.5 trillion won) followed.
Foreign investors' share of the domestic stock market capitalization rose to 35.3%. Foreign investors' domestic stock holdings ratio has steadily increased, from 30.7% in March to 32.5% in April and 35.3% in May.
Foreign investors who were net sellers of domestic stocks are turning to domestic bonds. This month, foreign investors were net investors of 879.1 billion won in listed bonds. They were net buyers of 1.1715 trillion won in bonds and received 292.4 billion won at maturity.
Foreign investors were net investors of 990 billion won in Government Bonds. They withdrew a net 110 billion won from special-purpose bonds, holding 315.9 trillion won in Government Bonds (94.7%) and 17.6 trillion won in special-purpose bonds (5.3%).
By remaining maturity, they were net investors of 700 billion won in bonds with maturities of at least 1 year and under 5 years, and 430 billion won in bonds with maturities of 5 years or longer. They withdrew a net 250 billion won from bonds with maturities under 1 year.
The balance held also increased by 840 billion won from the previous month to 33.36 trillion won. Asia (13.33 trillion won) had the highest share at 40%, followed by Europe (13.2 trillion won) at 39.6%.