SEOUL, Aug. 5 (Korea Bizwire) — South Korea’s financial watchdog said Monday it has found no indications of unusual behavior among Japanese investors in the South Korean capital market despite an escalating bilateral trade row.
The neighboring countries have been locked in a trade dispute since Tokyo imposed curbs on exports of high-tech materials to Seoul on July 4, in apparent retaliation against a Seoul court ruling ordering a Japanese firm to provide compensation for wartime forced labor.
Last week, Japan’s Cabinet approved a proposal to remove South Korea from a whitelist of preferred export partners, raising the stakes in the trade spat.
An official of the Financial Supervisory Service (FSS) said there are still no signs of Japanese investors’ unusual movements, such as a fund outflow.
According to the FSS, Japanese investors held 12.98 trillion won (US$10.8 billion) worth of South Korea’s listed stocks as of end-June, accounting for a mere 0.8 percent of the country’s market capitalization and 2.8 percent of foreign shareholdings.
U.S. investors held the largest 240.05 trillion won, or nearly 43 percent of foreign share ownership, followed by British investors with 44.82 trillion won and those from Luxembourg with 35.60 trillion won.
Japanese investors’ holdings of South Korean listed stocks rose 4 percent on-year in the first half of the year. Comparable figures were 10 percent for the U.S., 7.7 percent for Britain and 13 percent for China.
According to industry sources, Japanese investors held 1.6 trillion won worth of listed South Korean bonds as of end-June, accounting for 1.3 percent of all foreign holdings.
Meanwhile, there were 4,128 Japanese individual and institutional investors registered with the FSS as of end-June, or 8.7 percent of the total registered foreign investors.
Japan had the second-largest number of investors in South Korea, trailing the U.S. with 15,639, according to the FSS data.