"The foreign buying spree has continued this year, but the pace of growth has slowed to a moderate pace," Choi Jung-kyung, a director in the ministry, said. "I think foreign investment has nearly reached saturation point given the investment amount."
Choi said foreigners invested $9.5 billion from January to the end of last week, lifting the ratio of foreign holdings in the domestic bourses to more than 40 percent, the Korea Times reported.
"Given stocks held by present management to fend off hostile takeovers, and those controlled by foreign investors, there aren't too many attractive stocks to invest in at the moment," Choi said.
But some analysts downplayed the government's view, saying strong foreign buying is expected to continue because of improving domestic demand.