Korean funds are buying Chinese stocks again after selling US$984 million in past 3 years

South Korean fund managers are renewing their interest in Chinese equities after pulling back from the market in the past three years, joining global investors in diversifying into non-dollar assets amid a weakening US currency.

Korean investors were net buyers of US$499.2 million worth of stocks in Hong Kong and mainland China this year, according to the latest data published by SEIBro, a portal maintained by Korea Securities Depository. The US dollar has weakened 10 per cent against a basket of major currencies.

The investors – primarily pension funds, insurers and brokerages – were net sellers of those equities in each of the past three years totalling US$984.6 million, after buying equities worth US$1.04 billion in 2021, according to SEIBro.

Xiaomi, BYD, Alibaba Group Holding and Pop Mart were among their most traded Chinese stocks listed in Hong Kong, Shanghai and Shenzhen.

01:42

Trump imposes 25% unilateral tariffs on Japan, South Korea amid slow negotiation progress

Trump imposes 25% unilateral tariffs on Japan, South Korea amid slow negotiation progress

“Korean investors, similar to other global investors, are actively seeking investment opportunities to diversify” given the US dollar weakness, said Raymond Cheng, the North Asia chief investment officer for wealth solutions at Standard Chartered. At the same time, China’s economic data surprises, and rising consumer stocks “have garnered investors’ attention”, he added.