Foreign investors shifted to net sellers of listed South Korean equities last year as heightened global market uncertainties prompted a flight for safer assets, the financial watchdog said Thursday.

Overseas investors sold a net 9.6 trillion won ($8.4 billion) of local stocks in 2011, compared with a net purchase of 22.9 trillion won the previous year, according to the Financial Supervisory Service.

The sharp fall came as foreign investors offloaded 9.3 trillion won worth of shares between August and December amid the first-ever U.S. credit downgrade on Aug. 5 and lingering eurozone debt woes.

At the end of last year, foreign investors’ stock holdings totaled 351.5 trillion won, or 30.4 percent of domestic stock ownership, the FSS said. At the end of 2010, stock ownership stood at 31.2 percent worth 386.4 trillion won.

The FSS noted that most countries’ holdings of South Korean stocks trended lower as they sold their equities to secure liquidity, but China and Singapore saw their holdings increase last year.

U.S. investors remained the biggest investor group with holdings worth 144.1 trillion won, followed by British investors with 37.9 trillion won.

Meanwhile, overseas investors’ net bond investments also fell from a year earlier.

Foreign investors’ net investments in the local bond market reached 7.1 trillion won, more than halving from 16.9 trillion won in 2010, according to the FSS.

Overseas investors’ bond holdings totaled 83 trillion won at the end of last year, compared with 74.2 trillion won at the end of 2010.

U.S. investors were the biggest bond holders with investments worth 16.4 trillion won followed by investors from Luxembourg and China with 13 trillion won and 10.2 trillion won, respectively, the FSS said. 

(Yonhap News)