The inflow of the Middle Eastern petrodollar to the Korean stock markets has been halted, as the Arab members of the Organization for Petroleum Exporting Countries shift their stock investment portfolios following the plunge in oil prices. According to the Financial Supervisory Service on December 21, the balance of investment from the Middle East has turned to the net-selling position of 78 billion won as of the 18th from the net-buying balance of 217 billion won in November.
The investors from the Middle Eastern four countries including Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar abruptly stopped buying up shares in Korea in December after net-buying 1,133 billion won during the five-month period between July and November this year. During the month of May this year alone, Middle Eastern investors bought shares worth 1,172 billion won. Qatari investors net-bought 816 billion won worth of shares between April and August.
Even after September when the international oil prices showed visible signs of weakness, the investors from oil-producing countries in the Middle East maintained their net-buying position of about 200 billion won a month. Starting from November, however, they began increasing sell volume except for Saudi Arabia. In December, however, even Saudi Arabia recorded a net-selling balance of 90 billion won.
The shift of Middle East oil money to a net-selling position was largely due to the falling oil prices. On December 18, the per-barrel spot price of West Texas Intermediate declined to $54.11, which reduced the ability of Middle Eastern oil producing nations to invest in foreign stock markets.
Source: The Korea Economic Daily
