South Korea's direct overseas investment posted a double-digit expansion in the second quarter on surging investment in manufacturing industries, a government report showed Thursday.

Direct overseas investment reached 12.96 billion U.S. dollars in the April-June quarter, up 25.8 percent from a year earlier, according to the Ministry of Economy and Finance.

It was the biggest increase in five quarters, turning around in three quarters.

Investment in the overseas manufacturing industry soared 235.7 percent over the year to 4.98 billion U.S. dollars in the June quarter as local chipmakers increased mergers and acquisitions overseas.

Investment in the finance and insurance sectors recorded 3.87 billion U.S. dollars, followed by the real estate sector with 1.36 U.S. billion dollars and the wholesale and retail industry with 790 million U.S. dollars, respectively.

Direct investment in Asia accounted for 32.7 percent of the total in the second quarter, ranking the first spot.

It was trailed by the Latin American countries with a portion of 29.2 percent, North America with 22.1 percent and Europe with 14.4 percent each.