South Korean investors in U.S. equities, known locally as "seohak ants," ramped up their net purchases again in October after two straight months of decline, even as volatility intensified in the domestic market. As U.S. technology shares wobbled on concerns over artificial intelligence spending, they bet on the hardest-hit names while broadening their buying into index, bond and dividend exchange-traded funds. Analysts cautioned, however, that the concentration of money in leveraged products has raised the risk of losses.
Korean investors net bought $2.96 billion of U.S. stocks between the 1st and the 14th of this month, according to the Korea Securities Depository on the 15th. The half-month total was about three times September's net purchases of $1.0 billion. Net buying had fallen for two consecutive months, from $4.64 billion in July to $1.96 billion in August and again last month, before rebounding this month.
The revival in buying is seen as reflecting an appetite for bargain hunting in U.S. technology shares, which fell sharply during a simultaneous correction in domestic and overseas markets. In the United States, technology stocks also weakened on questions about the profitability of AI infrastructure investment and on funding costs tied to high interest rates.
The buying was in fact concentrated in leveraged semiconductor products. Investors net bought $1.73 billion of the Direxion Daily Semiconductor Bull 3X ETF (SOXL), which seeks three times the daily return of the ICE Semiconductor Index. That amounted to 58.5% of all net purchases of U.S. stocks in a single product. The pattern contrasts with September, when the Direxion Daily Semiconductor Bear 3X Shares ETF (SOXS), which tracks three times the inverse daily return of the Philadelphia Semiconductor Index (SOX), ranked near the top with $138.83 million.
Money also flowed into growth stocks and into index, bond and dividend ETFs. SGOV, an ultra-short-term U.S. Treasury ETF, ranked second with $113.82 million, followed by quantum computing company IonQ at $91.1 million and the dividend ETF SCHD at $82.4 million. VOO, which tracks the Standard & Poor's 500 index, was fifth at $73.51 million, AI data center operator IREN was sixth at $67.06 million, and the Nasdaq 100 ETF QQQM was eighth at $60.17 million, pointing to a parallel shift toward defensive asset allocation.
The concern is that the recent plunge in semiconductor indexes raises the prospect of losses for these investors. The SOX fell for six consecutive trading sessions from the 7th through the 14th, losing 11.6%. SOXL plunged 32.7% over the same period. Korean investors held $5.68 billion of SOXL as of the 13th, the fourth-largest holding after Tesla, Nvidia and Alphabet. Applying the previous day's decline, the drop in market value alone is estimated at about $758.21 million, or roughly 1.016 trillion won.
Brokerages say third-quarter earnings at U.S. big tech companies and the policy direction of the Federal Reserve will determine whether technology shares rebound. Their view is that the recent correction can settle only once profitability is confirmed and funding pressures supporting large-scale capital spending ease. Hwang Soo-wook, a researcher at Meritz Securities, said there is a need "first to confirm whether the rally in credit default swap premiums at major companies breaks."