Net external financial assets increased for the first time in three quarters in the third quarter. Net external financial assets are calculated by subtracting external financial liabilities—foreigners' investment in Korea—from external financial assets, which are Korean investors' overseas investments. Both the Korea and U.S. stock markets rose in the third quarter, and the valuation gains of retail investors investing overseas were larger.
According to the Bank of Korea's international investment position for the third quarter on the 19th, net external financial assets totaled $1.0562 trillion, up $25.8 billion from the second quarter. It was the first increase in three quarters since the fourth quarter of last year.
The rise in net external financial assets in the third quarter was due to valuation gains of retail investors investing overseas outpacing those of foreign investors in the domestic stock market. While external financial assets increased by $115.8 billion in the third quarter, external financial liabilities grew by $900.
A Bank of Korea (BOK) official said, "As U.S. stock indexes rose, the valuation of stock investments increased, and as expectations grew that the United States would cut its benchmark interest rate, overseas bond investment also increased." The domestic stock market also climbed in the third quarter. However, valuation gains were reduced by a weaker won (a higher exchange rate).