Since the liberalization of the capital market, investment restrictions against foreign investors have been lifted gradually, expanding influential powers of foreign investors over Korea’s domestic stock market. The increase in foreign stock investment has brought a number of impacts on the Korean stock market. For instance, at the initial stage in the early 1990s, foreign investors, equipped with advanced skills and techniques, invested in undervalued stocks, causing the phenomenon called a revolution of stocks with low PER, thanks to which prices of these stocks skyrocketed. Also, foreign investors gained enormous profits from long-term and concentrated investment on rigorous companies, significantly changing the investing patterns of domestic investors. Not only that, the Sovereign Asset Management triggered a dispute over the management of SK Corp. in 2004 when the company was involved in the accounting fraud scandal. The dispute attracted an increasing attention to the market for corporate control, a relatively new concept to Korea at that time.

With the growing influence of foreigners on the domestic stock market, policy authorities as well as domestic investors have increasingly paid more attention to the trading patterns of foreigners. As more Koreans learned about foreigners’ high stock returns thanks to their advanced investment techniques and strategies, their daily trading trends have come under the spotlight among stock investors. Their pattern is of great significance also in that it tends to represent the assessment of foreign investors in the case of major events at home and abroad.

Such high attention to foreigners’ stock trading was largely attributable to the foreign investor registration system, which requires a foreign investor to obtain an Investment Registration Card (IRC) prior to investing. In the case of major economic or non-economic events, it usually takes a considerable amount of time to confirm relevant information on cash flow, but thanks to this system, anyone can access information on the flow of foreign stock investment on a daily basis, which makes it easy to check overseas views on respective events.

The attention to the flow of foreign stock investment reached its peak between 2004 and 2005, when major asset management companies, like Sovereign, attempted a battle for control of Korea’s leading companies. Such attention, however, had decreased, as the stock market continued to remain bullish despite the continued net selloff by foreigners. Then, during the global financial crisis triggered in 2008, foreign investors went into a selling spree and the foreign exchange rate shot up, causing severe impacts on domestic financial markets and attracting renewed attention to the trading patterns of foreign investors.

This study analyzes the stock trading of foreign investors from two perspectives. First, it uses the principal component analysis in order to see which factors among various macroeconomic variables do foreign investors mainly depend on when deciding on net buying. The result demonstrates that the improvement in the domestic economy and the global financial market tends to increase the net buying by foreign investors, and that during a crisis, the relative decrease in the foreign reserves turns out to trigger the net selloff by foreign investors.

Second, the study analyzes foreigners’s preference by stock category, and as it was found from the preceding studies, foreign investors prefer large-sized companies or those with a high export ratio due to the asymmetry of information in Korea and they tend to carefully consider the financial stability, such as cash holdings of concerned companies before deciding to invest. The study also conducts an analysis on what impacts from such preference were made on the decision to sell at the time of the financial crisis in 2008. The result shows that they mainly sold off stocks whose shares of investment amount were among the largest almost without considering the characteristics of each stock, a similar pattern observed during the burst of IT bubble in 2002. This can be translated to mean that in the event of a macroeconomic impact, the microeconomic portfolio has almost no influence on the trading pattern.

Entering 2009, foreign investors posted a massive buying trend, considerably raising the stock holding ratio of foreigners that had been contracted for the past several years. In this regard, when foreign investors go on a selling spree depending on macroeconomic changes, such as larger risk factors in the global financial market and the slowdown in the domestic economy, it is impossible to exclude the possibility that there would be a massive outflow of foreign investment funds, just like the one in 2008, along with the outbreak of a turmoil within the domestic financial market.

Therefore, since fully recognizing the limitation that microeconomic response by the corporate sector would not be enough to handle the emerging potent risk factors at home and abroad, it is now time to focus policy efforts on securing domestic macroeconomic stability which could contribute to alleviating expanded fluctuations.

요 약

제1장 연구의 목적 및 배경

제2장 외국인 투자자의 주식매매에 대한 기존 연구

제3장 외국인 주식투자 추이 및 현황

제4장 거시경제변수와 외국인 주식투자의 관계
　제1절 분석 자료
　제2절 추정 결과

제5장 외국인 투자자의 종목별 투자 결정요인 분석
　제1절 분석 자료 및 주요 변수의 구축
　제2절 실증분석 결과

제6장 요약 및 시사점

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