Korean Retail Investors Pour $7 Billion Into U.S. Stocks

Korean retail investors moved a record $7.27 billion into U.S. stocks over the last two months, surpassing their domestic market purchases, according to the Korea Securities Depository's Securities Information Portal SEIBro. The surge in activity reflects a growing appeal of overseas markets, which offer steadier returns amid heightened volatility in the Korean market.

Retail investors netted $7.04 billion in U.S. stocks from July 1 to August 28, outpacing their $8.75 billion purchases on the KOSPI index by more than $300 billion. This marks a significant shift from previous patterns, where Korean stocks had dominated retail investment. The KOSPI experienced a correction after reaching a record high of 9,114.55 on June 22, falling to 6,788.88 by August 28, a 25.52% decline from its peak.

U.S. markets, however, kept climbing, with the S&P 500 rising 3.09% to 7,730.99 and the Nasdaq gaining 1.25%. Korean investors have been particularly drawn to leveraged semiconductor ETFs, with SOXL funds accounting for roughly 42.7% of total U.S. stock purchases. Individual stocks such as SK hynix, Alphabet, and SpaceX were among the most heavily bought, while Nvidia saw net selling as investors took profits.

The decline in investor deposits, from 132.47 trillion won to 98.92 trillion won, suggests that much of the capital has moved into U.S. stocks. Factors contributing to this shift include the weakening won-dollar exchange rate, volatility in the KOSPI, and increased demand for dollar conversion and alternative investments in U.S. stocks.