As financial authorities criticized brokerage firms for overheated overseas stock marketing and moved to apply pressure, brokerages are scrambling to pull back, hastily ending promotions and taking a defensive stance. After ending a series of events tied to overseas stocks, they also began guiding investors on precautions for overseas stock investing. On top of that, Toss Securities decided to change the rewards for its attendance-check event, which had gained popularity as "app-tech (application money hacks)," from overseas stocks to won.
On the 26th, Mirae Asset Securities posted a "notice on precautions for overseas stock transactions." It said investors should heed exchange-rate fluctuations and settlement risk when trading overseas stocks, differences in trading structure and risk between overseas and domestic stocks, and differences in tax regimes.
On the 24th, Meritz Securities and Toss Securities also issued similar guidance on "precautions for overseas stocks and other overseas investments." Meritz Securities delivered it to individual clients via its KakaoTalk channel messages, while Toss Securities posted the notice at the top of its app.
That day also brought word that Meritz Securities would end the no-fee policy for U.S. stock trading on its non-face-to-face dedicated account "Super365."
In addition, announcements continued about the end of overseas stock-related events. On the 23rd, Toss Securities said it would change the reward for its long-running "Toss Securities attendance check" event from overseas stocks to won-denominated credits. Toss Securities said, "Stock rewards accrued through the attendance check will be converted to won credits in the same amount." The event had drawn attention as app-tech by offering fractional shares of popular U.S. stocks for daily check-ins.
As the Financial Supervisory Service pointed to overheated overseas stock marketing by securities firms and moved to apply pressure, brokerages have not only ended their overseas stock events but also begun guiding investors on precautions.
On the 9th, the Financial Supervisory Service (FSS) called in chief consumer officers (CCOs) of major securities firms for a meeting and recommended refraining from excessive events and ads for overseas stocks and derivatives. The Korea Financial Investment Association also distributed materials on the 19th to improve overseas investment sales practices.
The Financial Supervisory Service (FSS) also said that starting early next year, events related to overseas investments will be banned outright, and issued guidance telling securities firms not to reflect related key performance indicators (KPIs) excessively in next year's business plans.
Meanwhile, the government recently rolled out tax incentives to lure Korean retail investors trading U.S. stocks back to the domestic market. On the 24th, the Ministry of Economy and Finance announced a "tax support plan for domestic investment and foreign exchange stability."
Under it, if investors sell overseas stocks held as of the 23rd in the future and instead make long-term investments in domestic stocks with the proceeds, capital gains taxes on overseas stocks will be temporarily exempt. Tax relief will also vary depending on the timing of the return to the domestic market: 100% for those returning in the first quarter next year, 80% in the second quarter, and 50% in the third quarter.
Still, domestic investors' reactions are not entirely positive. In online communities, reactions included, "It's a misguided witch hunt to say U.S. stock investors are the culprits behind the weak won," and "Don't take the government's tax-saving bait."
One Korean retail investor trading U.S. stocks said, "I have no intention of coming back because the gains on stocks invested in the U.S. market are higher than the tax benefits."
Some say it is not a bad idea considering the domestic market's gains. One overseas stock investor said, "The tax benefit of a 100% reduction if you move by the first quarter is tempting," adding, "It might be fine to take profits on U.S. stocks in the first half of next year, sell at a high, and invest in domestic stocks with room to rise. If you want exposure to U.S. stocks, couldn't you use exchange-traded funds (ETFs) listed in Korea?"