Foreign Investors Reallocate Korean Bond Portfolio Toward Government Debt Following WGBI Inclusion, Holdings Up 18.8 Trillion Won

According to iM Securities' mid-check report released on July 15, foreign investors' domestic bond portfolio is rapidly reallocating toward government bonds following World Government Bond Index (WGBI) inclusion, with actual holdings increasing by 18.8 trillion won. During the March 30 to July 10 analysis period, foreign investors' net purchases of government bonds reached 38.6 trillion won, though this includes 7.7 trillion won in maturity redemption reinvestment.

The research note emphasizes that maturity redemption reinvestment should be excluded from net purchase figures to avoid overestimating WGBI effects. Additionally, portfolio rebalancing—where investors shift funds from monetary stabilization bonds and foreign exchange bonds into government bonds—contributed to the reallocation. During the same period, non-government bond holdings declined by 12.1 trillion won. Capital concentration was notable, with 76.2% of total net purchases concentrated in the top 10 bond issues, suggesting a blend of passive index tracking and active optimization strategies.