Foreign investors scooped up Korean stocks in May for the seventh consecutive month on the back of hopes for a recovery in the chipmaking sector, central bank data showed Wednesday.

Offshore investors bought a net US$1.34 billion worth of local stocks last month, following $1.92 billion worth of purchases in April, according to the data from the Bank of Korea.

The central bank said foreigners’ net stock purchases came amid the outlook for a rebound in the chipmaking sector despite protracted restrictive monetary stances in major economies.

Foreigners bought a net $2.77 billion worth of local bonds last month, following a net buying of $2.12 billion a month earlier, the data showed.

Meanwhile, the premium on credit default swaps (CDS) for South Korea’s five-year dollar-denominated currency stabilization bonds amounted to 35 basis points in May, down from 39 basis points the previous month. A basis point is 0.01 percentage point.

The CDS premium reflects the cost of hedging credit risks on corporate or so
vereign debt. A rise implies a drop in the credit spreads of sovereign bonds and higher borrowing costs.

Source: Yonhap News Agency