Foreign securities invested by South Korea's financial institutions plunged last year due to sharp declines in the share price of major investment destinations, the central bank said Tuesday.
Foreign currency-denominated securities held by domestic financial institutions stood at an outstanding 58.2 billion U.S. dollars as of the end of 2011, down 11.4 billion dollars from a year earlier, according to the Bank of Korea (BOK).
Last year's drop came as mark-to-market valuation for investments in overseas stocks contracted sharply due to the drop in global stock prices. The BOK also attributed the drop to local asset managers who faced retrieval of money invested in foreign stock-typed mutual funds.
Investment in overseas stocks shrank 12.87 billion dollars on- year to 27.08 billion dollars as of end-December. Stocks in China tumbled by 21.7 percent last year, while those for China's Hong Kong, Brazil and Japan plunged by 20 percent, 18.1 percent and 17. 3 percent respectively.
In contrast, investment in foreign bonds edged up 0.69 billion dollars on-year to 13.55 billion dollars in 2011 due to a gain in the mark-to-market valuations, according to the BOK.
Investment in the so-called Korean Paper also increased 0.75 billion dollars on-year to reach 17.59 billion dollars in 2011 due to net buying by insurers. The Korean paper refers to foreign currency-denominated securities sold overseas by the South Korean government, financial institutions and companies./.