Foreign investment in South Korea rose 12.7 percent last year, led by European and U.S. investors, mainly because they raised their purchase of local stocks and bonds, the central bank said Tuesday.

Outstanding foreign investment in Asia's fourth-largest economy amounted to a record US$945 billion as of the end of 2012, compared with $838.2 billion the previous year, according to data by the Bank of Korea (BOK).

The data covered foreigners' direct investment, portfolio investment and other types of investment.

Foreigners' direct investment rose 10.2 percent on-year to $147.2 billion in 2012, and their investment in local stocks and bonds gained 22 percent to $582.1 billion, it added.

A rise in foreign investment in South Korea mainly came as foreign investors ramped up their purchase of local stocks and shares on a series of credit rating upgrades and a strong local currency, it added.

Foreign investors saw Korean assets as relatively attractive investment instruments last year as the economic fundamentals remained better than those of troubled major economies and the won's ascent to the U.S. dollar offered chances to lock in foreign exchange profits.

The Korean currency appreciated 7.6 percent to the dollar in 2012, the strongest since 2009.

By region, the European Union was the largest foreign investor in Korea with $261.5 billion, followed by the U.S. with $260.1 billion and Southeast Asian nations with $163.5 billion, the central bank said.

Japan was the No. 1 country in making direct investment in Korea with $54.6 billion last year, while the U.S. was the largest portfolio investor in Seoul with $204.8 billion, it added.

Source: Yonhap News (Apr. 23, 2013)