Foreigners Hold 36.6 Percent of Domestic Stocks

In the comparison of the ratio of stocks that foreigners hold in the bourses of every country against aggregate value of listed stock, they have 3 times more stocks in Korea than in America, and 1.6 times more than in Japan. Especially in Korea, the ratio increased to 36.6 percent in 2001 from 11.9 percent in 1995.

The increase of the ratio of foreigners holding stocks in the stock market means the inflow new funds into the market. But that has duplicity that both investors and listed companies make a profit from the inflow, but the country`s economy could be paralyzed, when foreigners simultaneously leave the market due to economic recession.

According to the `status quo of foreigners` holding stocks in the stock markets of advanced countries, ` which Financial Supervisory Service (FSS) inquired into on the 28th, the ratio of the foreigners holding stocks to aggregate value of listed stock in each country is 30.2 percent in Korea, 18.8 percent in Japan, and 10.1 percent in America in 2000.

The ratio in Japan increased a little to 18.8 percent in 2000 from 18.6 percent in 1999 and 14.1 percent in 1994. The ratio in America also increased to 10.1 percent from 7.6 percent during the same period.

The increase of the ratio of foreigners` occupation in the stock market is resulted from the globalization of finance market, but the increase of the influence of foreigners in Korea stock market is exceptionally rapid. The increase of the investment of foreigners means that our economy and enterprises became trustworthier.

Dr. Noh Hee-Jin from the Korea Securities Research Institute said, “as foreigners hold more stocks, positive effects are made that the stock market comes nearer to the international standards, and foreigners play a role of supporting stock market as a helpful power. But it has negative effects at the same time that domestic stock market assimilates to the stock market of America, and foreigners get much more profits than natives do. ”

Dr. Noh added, “as serious situation could happen when foreign funds ebb at a time, we should maintain sound and healthy economy. ”

Meanwhile, FSS announced that the influence of foreigners is rather high in England, Germany, and Hong Kong than in Korea.

According to the article announced by the International Federation of Stock Exchange (FIBV) in 1999, Foreigners had 29.3 percent out of total stocks in England bourse, 15.6 percent in German bourse, 12.3 percent in Korean bourse, and 6.4 percent in American bourse. Different from Korea, America, and Japan, countries of OECD don`t reveal the ratio of foreigners` holding shares to aggregate value of listed stock. Hence, the comparison should make with the volumes of shares that foreigners hold.

Byong-Ki Lee eye@donga.com