Korean Investors Lose About $36 Billion in US Stocks in Two Months as Buying Floods Into 3x Chip ETF
Summary
- Domestic investors' holdings of US stocks fell by $33.7 billion over two months, leading to losses of about $36 billion.
- The top net buy by Korean investors in June and July was SOXL, a 3x ETF tied to the Philadelphia Semiconductor Index, but holdings rose only slightly despite $3.77486 billion in purchases.
- Losses were also heavy in top holdings such as Tesla and Nvidia, as well as in domestic leveraged ETFs, where falling share prices and a sharp drop in market value hit retail investors.
Forecast Trend Report by Period
Korean Retail Investors Lose About $36 Billion in Two Months as Buying Shifts to US Stocks
South Korean investors are estimated to have lost about $36 billion on US stock investments over the past two months. Net purchases of US shares totaled $5.3 billion during that span, but the value of their US stock holdings fell by $33.7 billion.
Data from Seibro, the securities information portal operated by Korea Securities Depository, showed domestic investors held $170.4 billion in US stocks as of July 30. That was down 16.5% from $204.1 billion at the end of May.
Investors were net buyers over the period, purchasing $632.96 million in June and $4.66862 billion in July. After the Kospi peaked at 9,114.55 on June 20 and then fell sharply, investors turned to US equities.
Their returns were weak there as well. The drop in Korean investors' US stock holdings far outpaced declines in the major US indexes. Over the past two months, the S&P 500 fell 1.88% to 7,437.63 from 7,580.06, while the Nasdaq dropped 6.85% to 25,122.18 from 26,972.62.
Heavy buying of leveraged products appears to have contributed. The most-bought US stock by South Korean investors in June and July was Direxion Daily Semiconductor Bull 3X Shares, the SOXL exchange-traded fund that tracks the Philadelphia Semiconductor Index with three times leverage. Net purchases totaled $3.77486 billion. Even so, the value of SOXL holdings rose only slightly, to $5.81145 billion at the end of July from $5.35326 billion at the end of May.
Tesla was the largest holding as of July 30, at $17.9 billion. Its share price fell 29.1% to $308.85 from $435.79 over the same period.
Nvidia was the second-largest holding at $16 billion. Its share price fell 7.6% to $195.04 from $211.14.
Retail investors also posted steep losses in domestic leveraged products. In a recent report, Citi Global Markets Korea Securities said the market capitalization of leveraged ETFs tied to Korean assets peaked at about $52.5 billion on June 22. It has since shrunk to around $19 billion.
Han Kyung-woo, Hankyung.com reporter case@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.