Korean institutional investors' foreign securities holdings surged by nearly $90 billion last year, surpassing $500 billion for the first time. The increase reflects valuation gains on stocks and bonds from rising equity prices in major economies including the United States and Fed rate cuts, along with higher purchases.
According to the Bank of Korea's "Trends in Foreign Currency Securities Investment by Major Institutional Investors in 2025" released on the 4th, foreign securities holdings by asset managers, foreign exchange banks, insurers, and securities firms totaled $507.83 billion at market value as of year-end, up $87.24 billion (20.7%) from a year earlier. Both the balance and annual increase set all-time records.
"Strong U.S. economic growth and expectations for AI industry development drove equity prices higher in major countries, while the Federal Reserve's continued rate cuts pushed U.S. Treasury yields lower, generating valuation gains on both foreign stocks and bonds and increasing net investment," a BOK official said.
By product type, foreign equity holdings rose 29.2% ($66.04 billion) to $292.53 billion. The increase came from valuation gains on rising global stock prices combined with net purchases led by asset managers. The S&P 500 gained 16.4% last year, while the Nasdaq rose 20.4%, Euro Stoxx 50 climbed 18.3%, and Japan's Nikkei 225 advanced 26.2%.
Foreign bond holdings grew 11.6% ($18.98 billion) to $182.89 billion. The BOK attributed the increase to valuation gains from falling U.S. Treasury yields following Fed rate cuts and expanded net investment centered on insurers. The 10-year U.S. Treasury yield fell from 4.57% at the end of 2024 to 4.17% at year-end, according to the central bank.
Korean Paper holdings—foreign currency-denominated securities issued abroad by residents—rose 7.3% ($2.22 billion) to $32.41 billion, led by foreign exchange banks.
By investor type, asset managers ($68.1 billion), insurers ($9.43 billion), foreign exchange banks ($5.91 billion), and securities firms ($3.8 billion) all increased their holdings.