Foreign Capital Sees Net Outflow for Fourth Consecutive Month... $31.83 Billion Leaves Equities Alone

Net Outflow of 26.15 Billion Dollars in May

Rebalancing Drives Larger Net Outflow of Equity Capital

Bond Capital Sees Increased Net Inflow on WGBI Tracking Funds

Foreign capital has continued to flow out of the domestic stock market for four consecutive months. The net outflow, mainly focused on stocks, expanded again due to factors such as portfolio rebalancing following the rise in domestic stock prices.

On the 15th, the KOSPI index surged more than 5% in early trading, triggering a buy-sidecar. The electronic board in the dealing room at the headquarters of Hana Bank in Jung-gu, Seoul displays the domestic stock market index. 2026.6.15 Photo by Jinhyung Kang

According to the 'Trends in International Financial and Foreign Exchange Markets after May 2026' released by the Bank of Korea on June 15, foreign capital recorded a net outflow of 26.15 billion dollars from the domestic stock and bond markets last month. This marks the fourth consecutive month of net outflows since February. The scale of net outflow also increased significantly from 2.13 billion dollars in April.

The main contributor to this increased net outflow was equity capital. Equity funds saw a net outflow of 31.83 billion dollars last month. A Bank of Korea official explained, "The increase in net outflow was driven by rebalancing following the rise in domestic stock prices and profit-taking sales."

Bond funds, on the other hand, recorded a net inflow of 5.68 billion dollars. The inclusion of Korea in the World Government Bond Index (WGBI) attracted tracking funds, and increased bargain buying due to higher market interest rates led to a larger net inflow compared to April (550 million dollars).

The KRW-USD exchange rate stood at 1,507.9 won at the end of May, rising from 1,483.3 won in the previous month. This increase was driven by heightened uncertainty in the Middle East and net selling of domestic stocks by foreigners. However, the pace of the rise was moderated by government market stabilization messages and news of the National Pension Service selling FX forwards. Nevertheless, as of June 11, the exchange rate has climbed again to 1,528.9 won. The daily volatility of the KRW-USD exchange rate was 0.45%, down from 0.59% in April.

This content was produced with the assistance of AI translation services.