'When the market opens, they come' Pulling the strings of the U.S. stock market… Korean retail investors become 'major players' [Maeng Jinkyu's Global Money Flow]

Only 8% Korean ownership… U.S. small- and mid-cap stocks whose fate is tied to Korean retail investors

Korean retail investors investing in U.S. stocks have emerged as 'major players' in U.S. small- and mid-cap stocks. Following quantum computers and nuclear power, a stock related to cryptocurrencies has appeared with a Korean holding ratio close to double digits.

According to the Korea Securities Depository on the 5th, the balance of domestic investors' investment in Iren (as of the 3rd) stood at $1,045.04 million (about 1.5382 trillion won). That is 8.2% of the market capitalization of $12,680 million. This year domestic investors net bought $919.73 million worth of Iren. Iren transformed from a bitcoin mining company into an AI cloud business operator. Riding the AI boom, its stock rose 344.07% year-to-date.

Investments by Korean retail investors in Bitmine, the world's largest Ethereum-focused investment firm, have also surged. The balance of domestic investors' investment in Bitmine is $965.62 million. The Korean holding ratio relative to market capitalization is 7.4%. This year domestic investors' net purchases ranked second with $1,398.2 million, after Alphabet ($1,756.96 million). The balance of Korean investment in Rocket Lab, a private rocket company called the 'second SpaceX', is $646.31 million. The Korean holding ratio relative to market capitalization is 2.6%.

Trend-sensitive Korean retail investors have flocked to U.S. small- and mid-cap stocks that surged sharply in the short term, so invested amounts have rapidly increased, analysts say. Until last year, investments concentrated on quantum computers and small modular reactor (SMR)-related stocks, but this year they have expanded into virtual asset and AI-related stocks, which emerged as new leading sectors.

At the beginning of this year, the Korean holding ratio of IonQ, the flagship quantum computer stock, reached 31% of its market capitalization, but fell to 21.5% as of the 3rd of this month. The Korean holding ratio of another quantum computing-related stock, Rigetti Computing, also shrank from 17% to 6.2% over the same period.

Securities firms expect that investments by Korean retail investors in U.S. small- and mid-cap stocks will continue to expand as their overseas investment balances steadily increase. Last month domestic investors net bought $5,522.48 million worth of foreign stocks. After recording a monthly record high of net purchases in October ($6,813.00 million), they have continued aggressive buying.

However, many point out that U.S. small- and mid-cap stocks are highly volatile, showing double-digit daily gains and losses, so investors should be cautious. Long-term returns often fail to meet expectations. It is estimated that the majority of domestic investors are actually suffering losses. The average return of 19,216 Bitmine investors registered on Naver Pay's 'My Assets service' is -20.77%. The average return of 26,538 Iren investors is also -10.46%.

An asset management firm official advised, "Individual investors tend to perceive losses not relative to principal but relative to peak prices, so it is not easy to endure volatility even for long-term investments," and added, "Investing all funds in small- and mid-cap stocks should be avoided."

Maeng Jinkyu, reporter maeng@hankyung.com