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Foreign Investors Flee South Korean Stocks at Record Pace in February

Foreign investors sold a net $13.5 billion worth of South Korean stocks in February, marking the largest monthly net outflow on record. The central bank attributed the sell-off to growing caution over an artificial intelligence investment bubble and profit-taking after recent market gains. In contrast, foreign buying of local bonds increased to $5.74 billion. Separately, South Korea's science ministry announced a 25% increase in researchers selected for government-funded projects, allocating 643 billion won to revitalize basic science.

Key Points: Record Foreign Stock Sell-Off Hits South Korea in Feb

  • Record $13.5B stock sell-off
  • AI bubble caution drives outflow
  • Bond buying rises to $5.74B
  • Science research funding sees 25% boost
2 min read

Foreign net selling of S. Korean stocks hits record high in Feb: BOK

Foreign investors sold a record $13.5B in S. Korean stocks in Feb amid AI bubble fears, while bond buying increased, central bank data shows.

"Equity funds posted the largest monthly net outflow amid growing caution over AI-related investments and profit-taking - Kim Bo-seok, BOK"

Seoul, March 12

Foreign investment in the South Korean stock market recorded its largest ever monthly net outflow in February amid growing caution over a potential artificial intelligence bubble and profit-taking, central bank data showed on Thursday.

Offshore investors sold a net $13.5 billion worth of local equities last month, following $500 million worth of net selling in January, according to the data from the Bank of Korea (BOK), reports Yonhap news agency.

The February figure marked an all-time monthly high, surpassing the previous record of $11.04 billion set in March 2020.

In the bond market, foreign investors bought $5.74 billion worth of bonds in February, compared with purchases of $2.44 billion a month earlier.

Taken together, foreigners sold a net $7.76 billion worth of local securities last month, reversing from a net purchase of $2.39 billion in January.

The February figure marked the second-largest monthly net outflow since July 2008, when the figure reached a record $8.97 billion.

"Equity funds posted the largest monthly net outflow amid growing caution over AI-related investments and profit-taking following recent gains in local stock prices," said Kim Bo-seok, chief of the BOK's international financial trends team.

"Larger net inflows into bond funds were supported by bargain hunting amid rising market interest rates and solid investment demand, particularly from the private sector."

Meanwhile, the science ministry of South Korea said Thursday it has selected around 4,600 individual science researchers to revitalise basic science research activities that had been drastically curtailed under the previous administration.

The Ministry of Science and ICT said it has selected 4,628 researchers to carry out individual projects under a government funding programme for the first half of 2026, marking a 25 per cent increase from the previous year.

The ministry will allocate 643 billion won ($435 million) for the new projects.

- IANS

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Reader Comments

P
Priya S
Interesting data. While foreign investors are pulling out of stocks, the South Korean government is increasing funding for science research by 25%. That's a smart long-term move. We need more of this focus on basic research in India as well.
R
Rohit P
$13.5 billion is a huge outflow! Makes our FII selling in India look small. Shows how interconnected global markets are. When US rates move, money flows out of emerging markets like Korea and India. We're all in the same boat.
S
Sarah B
The shift from equities to bonds is telling. Investors are seeking safety. The parallel push for science funding is the silver lining here. Nurturing homegrown innovation is the best buffer against volatile foreign capital.
V
Vikram M
Respectfully, while the data is clear, the article could have provided more context on *which* foreign investors (US, Europe, etc.) are selling. Also, comparing this to similar outflows from other Asian markets would give a better picture. Just my two paise.
K
Karthik V
AI bubble fears are spreading from the US to Asia. This is a warning for our own IT and tech stocks in India. Time for some portfolio rebalancing maybe. On the other hand, $435 million for 4600 researchers is fantastic support for the scientific community.

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