Last year, South Korea’s investments in the U.S. reached unprecedented levels, with the balance of U.S. investments surpassing 1 trillion USD for the first time. The proportion of U.S. assets in South Korea’s total foreign financial assets also hit a record high, exceeding 47%.
The surge in U.S. investments accounted for nearly 60% of the overall growth in foreign financial assets. This increase was fueled by a robust U.S. stock market and Korean investors ramping up their purchases of American stocks. Meanwhile, the share of investments in China dwindled to around 5%, further widening the gap in asset preferences between the U.S. and China.
The Bank of Korea’s preliminary report on the 2025 International Investment Position by Region and Currency, released on Friday, revealed that South Korea’s total foreign financial assets, excluding reserve assets, amounted to 2.4396 trillion USD at the end of last year. This marks a 344.8 billion USD increase from the previous year.
Of this total, U.S. investments accounted for 1.1492 trillion USD, a record-breaking increase of 204.2 billion USD compared to the previous year. This milestone marks the first time U.S. investments have exceeded the 1 trillion USD threshold.
The Bank of Korea noted that U.S. financial assets have been on an upward trajectory since the mid-2010s, with growth accelerating since 2018-2019, primarily driven by stock investments.
The share of U.S. assets in total foreign financial assets reached 47.1%, up 2.0 percentage points from 45.1% the previous year, setting a new record for the third consecutive year. The U.S. share has steadily climbed from 41.8% in 2023 to 45.1% in 2024, and then to 47.1% last year.
In contrast, the share of Chinese assets declined from 6.9% to 5.7% during the same period. The investment balance in China decreased from 143.9 billion USD to 139.8 billion USD, a drop of 4.1 billion USD. The Bank of Korea observed that the share of financial assets in China has been on a downward trend since the end of 2014.
Breaking down asset types, investments in U.S. stocks surged by 178.6 billion USD compared to the previous year. This increase represents 67.2% of the overall rise in securities investments, which totaled 265.6 billion USD. The balance of U.S. securities investments grew to 802.8 billion USD, accounting for 64.1% of total foreign securities investments.
The U.S. stock market demonstrated strong performance last year, with the Dow Jones Industrial Average climbing 13.0% and the Nasdaq surging 20.4%. The combination of increased net purchases of U.S. stocks by Korean investors and gains from rising stock prices significantly boosted the balance of U.S. securities investments.
Direct investments in the U.S. also saw growth, increasing by 20.8 billion USD to reach 250.1 billion USD by the end of last year.
Overall direct investments, including those in the U.S., rose by 66.8 billion USD. Investments in the European Union (EU) and Southeast Asia also saw notable increases of 15.9 billion USD and 14.0 billion USD, respectively.
As of the end of last year, total foreign financial liabilities amounted to 1.9819 trillion USD, an increase of 55.8 billion USD from the previous year.
This increase was largely attributed to the significant rise in domestic stock prices, which expanded the valuation of foreign investments in Korean securities. Last year, the KOSPI index soared by an impressive 75.6%, while the Korean won appreciated by 2.4% against the USD.
Moon Sang-yoon, head of the Bank of Korea’s foreign investment statistics team, explained that despite foreign investors’ net selling of domestic stocks last year, the substantial rise in the KOSPI led to a larger increase in the value of stocks held by foreign investors.
Total foreign direct investments in Korea increased by 25.7 billion USD, while securities investments rose by 524.1 billion USD. U.S. investors contributed significantly, with an increase of 199.1 billion USD in Korean securities, accounting for about 38% of the total increase in foreign securities investments. The balance of financial liabilities to the U.S. reached 523.1 billion USD, up 202.1 billion USD from the previous year.
In terms of currency composition, assets denominated in U.S. dollars amounted to 1.5136 trillion USD, an increase of 224.9 billion USD from the previous year. The share of dollar-denominated assets in total foreign financial assets rose to 62.0%, up 0.5 percentage points from a year ago.
In contrast, assets denominated in CNY saw only a modest increase of 3.0 billion USD, reaching 115.3 billion USD. The share of yuan-denominated assets in total foreign financial assets declined from 5.4% a year ago to 4.7% at the end of last year.
Team leader Moon commented that while the recent strength in the domestic stock market may slightly temper the growth of U.S. investments, it’s unlikely that we’ll see a significant decline in the share of U.S. assets within total foreign financial assets.
He added that the expansion of overseas investments should not be viewed negatively in terms of accumulating foreign financial assets. However, he cautioned that continued outflows of foreign capital could potentially exert upward pressure on exchange rates, a factor that warrants careful monitoring.
