Korean retail investors are shifting money into U.S. stocks as the domestic market swings sharply, with net purchases topping 6 trillion won this month. More than 70% of that money went into a single high-risk product that bets three times on gains in semiconductor stocks, underscoring an increasingly aggressive stance.
Korean Retail Investors Buy $4.8 Billion in U.S. Stocks This Month, Most in Nine Months
Net purchases of U.S. stocks by Korean investors totaled $4.8009 billion (about 6.3621 trillion won) from the 1st through the 22nd of this month, according to SEIBro, the securities information portal run by the Korea Securities Depository, on the 25th.
That is roughly 4.8 times the $1.00128 billion in net purchases recorded for all of last month. On a monthly basis, it is the largest figure since the $5.00299 billion logged in January, nine months ago. With trading days still left in the month, buying could push the total past this year's high.
Korean investors' flows have swung widely this year. Net purchases, which exceeded $5 billion in January, fell to $1.6915 billion in March and turned to net selling in April and May.
They recovered to $4.64241 billion in July before falling again to $1.96234 billion in August and $1.00128 billion in September. Buying of U.S. stocks then expanded sharply this month as volatility increased in both domestic and overseas markets.
4.7 Trillion Won Into Triple-Leveraged Chip ETF, or 74% of All Net Purchases
The product investors bought most was an exchange-traded fund that bets on gains in the U.S. semiconductor sector.
The Direxion Daily Semiconductor Bull 3X Shares (SOXL) ranked first in net purchases from the 1st through the 22nd of this month, drawing $3.54764 billion (about 4.7041 trillion won). That accounted for about 73.9% of all net purchases of U.S. stocks over the same period.
SOXL, nicknamed "soksseul" among Korean investors, tracks three times the daily return of a U.S. semiconductor index. Gains multiply when chip stocks rise, but losses widen when they fall.
Buying has grown more concentrated recently. Net purchases of SOXL reached $2.73904 billion in the week from the 15th to the 21st, nearly matching the $2.7611 billion recorded over roughly a month from Sept. 18 to Oct. 21.
Second in net purchases was the Direxion Daily MSCI South Korea Bull 3X Shares (KORU), which tracks three times the daily return of the Korean stock market. Net purchases totaled $300.25 million this month.
Products tied to U.S. technology stocks also drew interest. QLD, which tracks twice the daily return of the Nasdaq 100 index, took in $141 million, while TQQQ, a triple-leveraged version, drew $111.19 million. QQQM, which carries no leverage, saw net purchases of $121.48 million.
Among individual stocks, aerospace company SpaceX ranked third overall at $226.06 million. Quantum computing firm IonQ ($221.88 million) and AI data center company IREN Limited (formerly Iris Energy) ($105.29 million) also ranked among the most-bought names.
Leveraged Bets Grow as KOSPI Plunges and Rebounds, Raising Loss Risk
The unstable course of the domestic market is tied to the expansion of overseas investing.
The KOSPI closed at 5,552.74 on the 20th, down 3.73%, then rebounded the next day to 5,735.66, up 3.29%, according to the Korea Exchange. Volatility was severe enough to trigger an intraday sidecar on buy orders.
Retail investors sold a net 574.8 billion won on the KOSPI market from the 15th to the 21st. Foreign investors sold a net 3.135 trillion won over the same period, while institutions bought a net 504 billion won.
Cash waiting on the sidelines also shrank. Investor deposits at brokerages fell about 12.5 trillion won, from 104.6377 trillion won on the 1st of this month to 92.0966 trillion won on the 19th. Margin loan balances declined about 2.4 trillion won over the same period.
Market watchers say investors chasing quick returns turned to U.S. leveraged ETFs as price swings widened in semiconductor and artificial intelligence stocks.
Leveraged ETFs, however, are designed to deliver two to three times the daily return, not the long-term return. When prices repeatedly rise and fall, daily compounding can make losses larger than expected. Investors in U.S.-listed products must also account for risk from moves in the won-dollar exchange rate.