Driven by policies to revitalize Korea's stock market, Korean retail investors trading U.S. stocks, who had paused for a while, are flocking back to Wall Street. As the rally in U.S. tech shares led by artificial intelligence (AI) and semiconductors continues, the amount of U.S. stocks in custody has surpassed 300 trillion won for the first time.
According to Savero, the securities information portal of Korea Securities Depository (KSD), on the 17th, as of the 14th the amount of U.S. stocks in custody held by domestic investors was $200,013.75 million (about 300.2703 trillion won). The custody amount refers to the size of foreign-currency securities purchased by domestic investors and deposited with Korea Securities Depository (KSD).
The amount of U.S. stocks in custody had at one point declined this year. The custody balance, which was around $167,480 million at the start of the year, fell to $146,570 million at the end of March. This is seen as the result of the government and political parties rolling out a series of policies to revitalize the domestic stock market, inducing capital to flow back onshore.
Earlier, political parties pursued a plan to grant tax benefits when selling overseas stocks and reinvesting in the domestic market, and domestic securities firms launched return-to-domestic-market accounts (RIA) to channel overseas stock funds back into the local market.
However, as U.S. stocks have recently strengthened again, centered on AI and semiconductors, investment flows are shifting once more. On the 14th (local time), the Standard & Poor's (S&P) 500 index and the Nasdaq index hit a record high on the back of gains in tech shares.
Domestic investors' buying was also concentrated in tech stocks. Over the past month, Intel ranked No. 1 by net purchases among U.S. stocks. Expectations for a semiconductor production contract for Apple's next-generation devices drove a sharp rise in Intel's share price.
The Roundhill Memory exchange-traded fund (ETF), which has a high weighting in Samsung Electronics and SK hynix, and the Invesco Nasdaq 100 ETF, which tracks the Nasdaq 100 index, also ranked among the top by net purchases. U.S. semiconductor and big tech names such as Micron and Alphabet likewise attracted investment funds.
The streak of net selling by Korean retail investors trading U.S. stocks from July last year through March this year is also easing. Last month, domestic investors' net selling of U.S. stocks totaled $468.93 million, but from the start of this month through the 14th, net selling fell to $216.19 million.
In the securities industry, the view is that as long as expectations for AI-related investments persist, inflows into U.S. tech stocks are likely to continue for the time being.