Seoul: Foreign investment in the South Korean stock market recorded its largest ever monthly net outflow in February amid growing caution over a potential artificial intelligence (AI) bubble and profit-taking, central bank data showed Thursday.

According to Yonhap News Agency, offshore investors sold a net US$13.5 billion worth of local equities last month, following $500 million worth of net selling in January, as reported by the data from the Bank of Korea (BOK). This February figure marked an all-time monthly high, surpassing the previous record of $11.04 billion set in March 2020.

In contrast, the bond market witnessed foreign investors buying $5.74 billion worth of bonds in February, compared with purchases of $2.44 billion a month earlier. Overall, foreigners sold a net $7.76 billion worth of local securities last month, reversing from a net purchase of $2.39 billion in January.

The figure for February marked the second-largest monthly net outflow since July 2008, when the figure reached a record $8.97 billion. "Equity funds posted the largest monthly net outflow amid growing caution over AI-related investments and profit-taking following recent gains in local stock prices," stated Kim Bo-seok, chief of the BOK's international financial trends team.

"Larger net inflows into bond funds were supported by bargain hunting amid rising market interest rates and solid investment demand, particularly from the private sector," Kim added.