SEOUL, Oct 5 (Reuters) - Foreigners’ net investment in South Korean bonds in September rose by the most since March due to a series of sovereign credit rating upgrades and expectations for additional monetary easing by the Bank of Korea, government data showed on Friday.
Foreign inflows to the local debt market totaled 1.5 trillion Korean won ($1.35 billion) last month, the Financial Supervisory Service (FSS) said in a statement, rebounding from 2.6 trillion won in net outflows in August.
Ratings agencies Standard & Poor’s and Fitch Ratings raised South Korea’s sovereign credit rating in September, citing in part the country’s strong fiscal position. The upgrades further bolstered the South Korean debt market’s status as a safehaven.
Analysts also widely expect the Bank of Korea to cut the policy rate at its Oct. 11 rate meeting to respond to the continued economic slowdown.
The central bank delivered a 25 basis-point rate cut in July, putting the benchmark seven-day repurchase agreement rate at 3.00 percent. It had kept the rate on hold in August and September.
Investors from Norway, Switzerland and China continued to increase their holdings in South Korean debt in September. The Norwegian sovereign wealth fund and the Swiss central bank continued to accumulate won-denominated bonds, a FSS official said without elaborating.
Foreingers were also net buyers of 3.1 trillion won worth of local stocks in September, slowing from a record 6.6 trillion won rise in August.
September’s stock market inflows were attributed to improved investor sentiment following new stimulus announced in major economies as well as some easing of risks stemming from the euro zone fiscal crisis. ($1 = 1112.6500 Korean won) (Reporting By Se Young Lee; Editing by Kim Coghill)