How Much Did Foreigners Earn in Korea?

As Dong-a Ilbo analyzed the accumulated data from Financial Supervisory Service and Korean Stock Exchange, the volume of foreigners` profit from the Korean market has been revealed for the first time.

According to the analysis, as of the end of 2004, foreigners earned a total of 121.4 billion dollars from differentiation of stock value and dollar-denominated profit. They also earned 10.8 billion dollars from dividends.

At the end of 1997, before foreigners were allowed to invest unconditionally in the Korean stock market, they held 6.1 billion won in listed stocks and bought $39.8 billion in stocks since then.

Foreigners invested $45.9 billion in the Korean stock market and earned $132.2 billion, recording 288 percent total earnings, or 41.1 percent annually.

The National Assembly has requested data on foreigners` profit from investing in Korea from the Ministry of Finance and Economy, Financial Supervisory Service, and the Korean Stock Exchange, but these institutions refused to reveal the information, citing the technical impossibility of analyzing transactions of about 5,000 foreign investors.

According to a high-ranking official from the Ministry of Finance and Economy, the institutions have the internal figures but are not revealing them to the public because of the difficulty of accurate data output. "Foreigners took advantage of the foreign exchange crisis and the unconditional opening of the investment market, earning high profits from stock trading," he added.

Won-denominated calculations showed a similar outcome. Subtracting the dollar-denominated profit from foreigners` total profit from investing in the Korean market for seven years and evaluate the rest in terms of won value results in an earnings figure of 128.215 trillion won, including dividend gain of 12.846 trillion won. It would be the same as investing 57.79 trillion won and recording 221.9 percent earnings, or averaging 31.7 percent earnings annually.

Over the last seven years, foreigners recorded the highest average annual return of 184.7 percent in 1999, while the lowest annual return was -34.6 percent in 2002. Gains by foreign investors in 1999 reached nearly three times that of Korean stock-type fund`s average earning ratio (62.3 percent).