As financial authorities emphasize investor protection, securities firms are actively competing to attract Korean retail investors trading U.S. stocks as the year-end approaches. Despite the high exchange rate and debate over an AI bubble, domestic investors' enthusiasm for U.S. stocks has not cooled, and interest among people in their 20s and 30s is rising quickly.
According to the Korea Securities Depository (KSD) SEIBro portal on the 15th, the amount of U.S. stocks held by domestic investors surged 49% from $112,101.81 million (about 165.4398 trillion won) last year to $167,670.33 million (about 247.3640 trillion won) as of the 10th of this month.
The share of people in their 20s and 30s in overseas stock investing is also expanding. At NH Investment & Securities, 51% of customers holding overseas stocks were in their 20s and 30s, and Samsung Securities tallied 45%. Some expect the 20s–30s share at online-focused securities firms to be even higher.
Domestic securities firms are ramping up year-end marketing. Kiwoom Securities is running a promotion cutting overseas stock transaction fees by 0.07 percentage point and offering a 95% currency exchange discount. It is giving customers who did not trade overseas stocks this year a purchase coupon of up to $22, and up to a 100,000 won coupon to customers who open an account under the name of a child born in 2007 or later and to new subscribers to "Kiwoom Stock Accumulation."
Hana Securities is offering up to $2,000 in prize money to top weekly performers through its "Overseas Stock King of Kings" event, and giving a $5 coupon the next day when customers buy at least one share of large caps such as Tesla, Nvidia, or Palantir. Toss Securities revised its U.S. stock commission rate to 0.1% of the transaction amount from the previous 0.25%.
But this runs counter to the financial authorities' stance emphasizing investor protection. On the 9th, Financial Supervisory Service Governor Lee Chan-jin said at a meeting with securities firm executives that "investors should be protected through risk management rather than revenue" and urged them to "refrain from advertising that triggers excessive competition."
The government has also recently voiced concern about Korean retail investors trading U.S. stocks. On the 27th of last month, Rhee Chang-yong, governor of the Bank of Korea, said, "I worry that overseas investing might spread like a fad as young people see it as cool." Some argue the increase in Korean retail investors trading U.S. stocks is fueling the won's weakness, and despite U.S. rate cuts, the won-dollar exchange rate stayed in the 1,470 won range as of the 12th.
Investors, however, push back on these claims. Office worker a person surnamed Gil, 30, said, "I've invested in overseas stocks for years, and there were no problems with the exchange rate in the past," adding, "Institutions such as the National Pension Service invest on a far larger scale."
The securities industry says it is in a bind between the financial authorities' stance and investor demand. It explains that people in their 20s and 30s are showing greater interest in U.S. stocks and indexes that can deliver higher returns.
Lee Jun-seo, a professor in the Department of Business Administration at Dongguk University, said, "For the younger generation, whose seed money is relatively small, the place where they can expect higher returns is the highly volatile U.S. stock market," adding, "In fact, the trading turnover of people in their 20s and 30s is about two to three times the average."
On the impact of rising overseas investment on the exchange rate, he said, "Compared to four to five years ago, inflows into the U.S. market have increased by about tenfold, but the impact on the exchange rate is limited."
An industry official added, "The U.S. market is highly attractive, but it is not desirable for the image to harden that it is preferred over domestic stocks."