Offshore investors increased their purchases of South Korean bonds for a fifth straight month in May, official data showed on Wednesday, following on from a revision of the growth outlook in light of firm exports and economic recovery. Foreign investors' bond holdings rose by a net 2.1 trillion won ($1.86 billion) in May, exceeding the 1.4 trillion won net increase in April, the Financial Supervisory Service (FSS) said.

South Korea's central bank took an unusually bullish view of economic growth prospects after news of strong exports, evidence of economic recovery, and a helpful boost from the new administration's multi-billion-dollar fiscal stimulus.

South Korea's new government announced a fiscal stimulus package on June 5, increasing social welfare subsidies and taking steps to deliver on President Moon Jae-in's election promise to create 810,000 public sector jobs.

The economy grew a seasonally adjusted 1.1 percent in January to March, its fastest for six quarters, revised central bank data showed, nicely topping an earlier estimate of 0.9 percent.

As of end-May, investors in Asia had 41.8 trillion won worth of South Korean bonds, making them the major holders. Investors in European regions hold 35.2 trillion won worth and those in North America 13.3 trillion won worth.

Copyright Reuters, 2017