The U.S. stock buying by "Korean retail investors trading U.S. stocks" that slowed late last year is reviving in the new year. While selling dominated at year-end as tax issues overlapped with profit-taking demand, a net buying trend has continued every single day this month.
According to the Korea Securities Depository (KSD) securities information portal on the 11th, from the 1st to the 8th of this month, domestic investors' net purchase settlement amount of U.S. stocks totaled $1,501.15 million (about 2.1833 trillion won). In Dec. last year, the monthly net purchases were about $1,873.85 million.
Since the new year, the stock most heavily bought on a net basis by domestic investors has been Tesla, the U.S. electric vehicle company ($374.16 million). Tesla shares have risen 44% over the past six months on favorable reviews and growth expectations for full self-driving (FSD).
The next most purchased by "Korean retail investors trading U.S. stocks" after Tesla was the leveraged ETF that tracks twice Tesla's share-price gains, "Direxion Daily TSLA Bull 2X Shares" ($281.04 million). Micron ($164.94 million) followed.
The net selling of overseas stocks at the end of last year is seen as tied to tax issues. For overseas stocks, a 22% tax rate (including local income tax) applies to annual capital gains exceeding 2.5 million won. In particular, because the capital gains tax on overseas stocks is levied based on sell transactions for which settlement is completed by year-end, investors generally tend to tidy up revenue and loss positions at year-end to reduce their tax burden.