Korean stock investors flee a bruising home market and pile into U.S.
South Korean retail investors are increasingly moving capital into U.S. stock markets, specifically targeting leveraged semiconductor ETFs and ADRs of domestic companies. Financial experts warn that this trend, characterized by buying local stocks at a premium in the U.S., may indicate speculative market behavior.
Why it matters
The shift highlights potential instability in the South Korean retail investment landscape and reflects global investor sentiment toward the semiconductor sector.
A wave of South Korean investors is flocking to U.S. markets to avoid a correction at home, even as global investors pile in.
Korean retail investors net sold domestic stocks for most of last week, even as the benchmark index entered bull market territory, according to Korea Exchange data. Overseas investors reversed course to become net buyers.
Here are five things related to those investors:
Of the $4.5 billion in U.S. stocks Korean investors net bought in July, around $840 million went into the chipmaker's U.S.-listed depositary receipts, according to Korea Securities Depository data. SK Hynix's ADRs were the second most net-purchased U.S. securities, even though Korean investors can buy the same company directly at home.
The U.S. receipts have traded at a premium to the Korean shares, which Owen Lamont, senior vice president of Acadian Asset Management, said was about 10% recently. They're also exhibiting greater volatility.
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