SEOUL, Feb. 16 (Yonhap) — The Cayman Islands became the largest investor as a tax haven country in the South Korean market last year, data showed Thursday, amid suspicions that some of the money could be owned by South Koreans disguised as foreign investors in an attempt to avoid taxes.

The amount of investment by the British overseas territory in local stocks reached 9.28 trillion won (US$8.12 billion) at the end of 2016, up from 3.67 trillion won in the same period of 2008, according to data compiled by the Financial Supervisory Service.

The financial watchdog said the number of institutional and individual investors from the Cayman Islands came to 3,305, accounting for 7.6 percent of all offshore investors in the South Korean markets.

Investors in the United States and Japan came in second and third with 14,383 and 3,818, respectively, according to the financial watchdog.

The value of equities held by investors in Hong Kong — the Chinese territory widely known for hosting some paper companies — reached 4.04 trillion won.

South Korea has been trying to clamp down on South Korean nationals who have established paper companies in offshore tax havens to disguise themselves as foreign investors.

Foreign investors in local stock markets are exempt from some of the taxes, including those applied to initial public offering shares.

South Korean officials have said they suspect that these offshore investors owned by South Koreans even engage in price manipulation, tax evasion and the creation of slush funds.

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