SEOUL: Foreign ownership of South Korean stocks fell to a six-year low, bourse data shows, as overseas investors preferred safer assets in the wake of the Ukraine crisis and ahead of a widely expected US rate hike.

       As of Friday, foreign investors held 666 trillion won (US$538bil or RM2.26 trillion) worth of local stocks on the main Kospi, accounting for 31.86% of the entire 2,091 trillion-won (RM7.09bil) market capitalisation, according to the data compiled by the Korea Exchange (KRX).

       The foreign ownership shrank to the smallest portion since 31.77% on Feb 11, 2016.

       Foreigners’ possession of Kospi shares had reached nearly 40% in early 2020 before dwindling to 36.5% at the end of that year and 33.55% at the end of 2021, largely due to the pandemic and the stock rush among retail investors.

       This year, the figure jumped to 34.2% on Jan 25 ahead of the initial public offering (IPO) event by battery making behemoth LG Energy Solution, before falling back to the 31% range early last week.

       Analysts attributed the foreign dumping of local stocks primarily to the uncertainties from Russia’s invasion of Ukraine.

       The invasion triggered economic sanctions from the United States and its allies, which turned investors risk-averse and appreciated the US dollar against the local currency.

       From Feb 18 to Friday, foreigners sold a net 5.75 trillion won (RM19.5bil) on escalating tensions over Ukraine. The amount is sharply higher than the foreign net selling of 1.46 trillion won (RM4.95bil) for all of January and 2.3 trillion won (RM7.8bil) from Feb 1-17.

       The local currency plunged to a 52-week low of 1,238.7 won (RM4.20) intraday against the US dollar Tuesday, sharply weaker compared with the 52-week peak of 1,105 won (RM3.75) on June 1, 2021, and closed at 1,232 won (RM4.18) Friday.

       Foreign selling was also fuelled by market jitters about the US Federal Reserve’s (Fed) signal for aggressive policy tightening, analysts said.

       The Fed chief has reiterated his stance to reign in the rising inflation pressure. The Fed is slated to announce its meeting results Wednesday. — The Korea Herald/ANN