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Chinese rake in S. Korean securities in H1
SEOUL, Aug. 5 (Yonhap) -- Chinese investors' foothold in South Korean securities jumped 42-fold in June from 54 months earlier, data showed Monday, raising woes over the country's heavy dependence on the world's No. 2 economy.

   Chinese investors' holding of local shares and bonds came to 19.8 trillion won (US$17.7 billion) in June, compared to 471.1 billion won at the end of 2008, the Financial Supervisory Service data showed.

   Market watchers said the combined amount of Chinese capital in South Korea is estimated to have reached at least 21.2 trillion won in June when taking their real estate assets into account.

   The number marks a 16 percent rise from six months earlier and accounts for 1.7 percent of South Korea's gross domestic product (GDP), the broadest measure of economic performance, for 2012.

   "While the Chinese investment in South Korean assets used to be led by the government, the recent rise is attributable to individual investors," said Leem Han-na, a researcher at the Woori Finance Research Institute.

   "The influx of Chinese capital to South Korea is expected to rise down the road as (the Chinese government) plans to allow individuals to directly invest in foreign securities soon," Leem added.

   Bonds accounted for the majority of Chinese investors' portfolios in South Korea, with their volume reaching 12.5 trillion won of as of end-June, up 15.9 percent from 10.7 trillion won tallied at end-December 2012.

   It marks the third-largest foreign investment in South Korean debts, while the United States and Luxembourg held comparable figures of 21.4 trillion won and 17.7 trillion won, respectively, over the cited period.

   Chinese investors also expanded their holdings of South Korean shares in the first half, with their investment volume reaching 7.3 trillion won at end-June, up 18 percent from six months earlier.

   China stood as the 11th-largest overseas investor in South Korean shares at end-June, accounting for 1.9 percent of the foreign investment in the local stock market, the data also showed.

   The United States held the largest portion of 38.8 percent at 146.9 trillion won, trailed by Britain with 9.5 percent and Luxembourg with 6.7 percent.

   Market watchers added that although the rising presence of Chinese investors will help in diversifying foreign capitals in the local market, it can also become a potential threat as South Korea can be vulnerable to a sudden exodus of Chinese funds.

   colin@yna.co.kr
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