South Korea’s Retail Investors Go Big on US Stocks
As the global economy continues to evolve, South Korean retail investors are making a bold move into the US stock market. For the first time, their collective holdings have surpassed $100 billion, driven by a growing fascination with Big Tech shares and leveraged funds.
The Rise of Individual Investors
Individual traders, often referred to as “mom-and-pop” investors, now hold a staggering $101.4 billion worth of US equities, according to data from the Korea Securities Depository. This represents a significant 64% increase from last year’s total. The shift towards direct investment in US shares is largely driven by the pursuit of better yields, as Korea’s Kospi Index has struggled to perform this year.
A Shift Away from Local Markets
Interestingly, while individual investors are flocking to US stocks, they have simultaneously sold off $3.2 billion worth of equities in the benchmark Kospi Index on a net basis so far in 2024. This trend suggests that investors are losing confidence in the local market, despite efforts by authorities to revitalize it through enhanced corporate practices.
Cryptocurrencies and Tech Shares Take Center Stage
Retail investors are particularly drawn to assets in volatile sectors, such as cryptocurrencies and tech shares. Tesla Inc. has emerged as the most popular stock among Korean investors, with individuals holding a combined $16.7 billion as of last week. Other top holdings include Nvidia Corp. ($13.8 billion), Apple Inc. ($4.6 billion), and Microsoft Corp. ($3.6 billion).
Leveraged ETFs Gain Popularity
Leveraged exchange-traded funds tracking US tech stocks have also gained immense popularity. Two of the most sought-after ETFs aim to deliver three times the daily gains of the Nasdaq 100 Index and US chip stocks, respectively. This trend suggests that investors are willing to take on higher risks in pursuit of greater returns.
A New Era for South Korean Investors
As the retail investor landscape continues to evolve, one thing is clear: South Korean investors are becoming increasingly sophisticated and eager to tap into global opportunities. With their sights set on the US stock market, it will be fascinating to see how this trend unfolds in the coming months.
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