Foreign Funds See Net Outflows for Eighth Straight Month... $14.16 Billion Leaves Stock Market

Bank of Korea: Trends in International Finance and Foreign Exchange Markets Since September
$19.97 Billion in Net Outflows from Stock and Bond Markets

Foreign funds have recorded net outflows from the domestic stock market for eight consecutive months. As investor sentiment weakened amid rising global long-term interest rates and concerns about a slowdown in artificial intelligence (AI) investment, funds in the stock market also shifted to net outflows after just one month.

According to the “Trends in International Finance and Foreign Exchange Markets Since September 2026,” released by the Bank of Korea on October 16, foreign funds recorded net outflows of $19.97 billion from the domestic stock and bond markets last month. This marked the eighth consecutive month of net outflows since February. The outflow was also more than four times the $4.5 billion recorded in August.

Foreign investment in stocks recorded net outflows of $14.16 billion last month. After net outflows of $20.7 billion in July shifted to net inflows of $40 million in August, the flow returned to net outflows just one month later. A Bank of Korea official said, “Investor sentiment weakened amid rising global long-term interest rates and concerns about a slowdown in AI investment.”

The bond market also recorded net outflows of $5.81 billion last month, with outflows widening for the third consecutive month since July. A Bank of Korea official explained, “Net outflows occurred due to weak reinvestment amid maturing Treasury bonds and the continued inversion of short-term arbitrage incentives.”

The won-dollar exchange rate fell to 1,352.8 won at the end of September, down 15.8 won from 1,368.6 won the previous month. The Bank of Korea said the rate rose amid increased geopolitical uncertainty in the Middle East and stronger expectations of a U.S. Federal Reserve rate hike, but later declined due in part to increased dollar selling by exporters. Since the start of October, the rate stood at 1,338.3 won as of October 14, remaining in the low-to-mid 1,300-won range.

Volatility in the won-dollar exchange rate widened in September compared with the previous month. The average daily range was 7.0 won, and the rate of change was 0.52%.

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