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| People look at signs posted at the entrance to a Silicon Valley Bank branch in California, March 10. AP-Yonhap |
By Lee Min-hyung
The shock collapse of Silicon Valley Bank (SVB) is sparking foreign capital outflow here, rekindling woes that the local stock market may again fall into the doldrums.
Data from the Korea Exchange and the Financial Supervisory Service showed that foreign investors turned to a net selling of local shares in March. They purchased Korean stocks worth 6.14 trillion won and 1.17 trillion won in January and February, respectively, raising hopes for the rebound of the local stock market.
But they sold local stocks worth 971.1 billion won in the benchmark KOSPI between March 2 and 15 as a reaction to heightened market uncertainty triggered by the abrupt bankruptcy of SVB. The incident created ripples across the global financial sphere, with other major financial institutions from the U.S. and Europe, such as Credit Suisse, also facing liquidity crises.
A general view is the Korean financial market will be hit less hard by the collapse of major foreign financial firms. But market analysts said the local stock market is still vulnerable to escalation in external risk factors for the time being.
"Korea is not directly influenced by the SVB shock, but foreign investors are displaying somewhat defensive gestures," Kang Dae-seok, an analyst at Yuanta Securities, said. "The Korean stock markets will slowly recover from concerns over the external financial risk factors."
Hit by the foreign exodus, the main bourse failed to defend the 2,400-point mark last week. The KOSPI closed at 2,377.91 points on the latest trading day. Earlier this year, the KOSPI fell to around 2,200 but bounced back to around 2,450 last month.
The near-term movement of Korean stocks will be affected by the result of the upcoming Federal Open Market Committee meeting slated for March 23. The U.S. Fed is forecast to weaken its hawkish rhetoric, possibly taking the baby step of increasing its key rate by 25 basis points during the meeting.
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