Retail Investors Leave KOSPI... Invest in 'Trump Beneficiaries' in the US

Korean Retail Investors Net Buy Over 700 Billion Won in Palantir and Tesla After Martial Law Declaration

Identified as Beneficiaries of Trump's Second Term Administration

Stock Prices Surge 49% and 74% After Trump's Election

Due to political risks stemming from the 'state of emergency', individual investors have turned their eyes to the US market, heavily investing in Palantir and Tesla, which are considered beneficiaries of Trump's second-term administration. Korean retail investors (domestic investors investing in overseas stocks) net bought over 700 billion won in these two stocks over eight trading days following President Yoon Suk-yeol's martial law declaration. Both stocks are on a high upward trend, indicating a move to ride the rising trend.

According to the Korea Securities Depository on the 16th, Palantir and Tesla ranked first and second in net purchases of US stocks by Korean retail investors from the 4th to the 13th, the eight trading days following President Yoon's martial law declaration. During this period, they net bought $321.47 million (about 461.7 billion won) of Palantir and $186.60 million (about 268 billion won) of Tesla.

Among the top 10 net purchase stocks, excluding exchange-traded funds (ETFs), Rigetti Computing (91.7 billion won, 8th place) and Alphabet (78.6 billion won, 9th place) were listed. However, the combined net purchase amount of these two stocks was only a fraction of that of Tesla alone.

On the other hand, individual investors sold 1.3344 trillion won worth of stocks in the domestic stock market (KOSPI and KOSDAQ) during the same period. As the impeachment situation prolonged, increasing uncertainty, they focused on the booming US stock market, particularly Palantir and Tesla.

The common point of these two stocks is that they are identified as beneficiaries of US President Donald Trump's administration. With Trump's second-term administration showing a move to utilize artificial intelligence (AI) for military purposes, expectations are growing that Palantir will benefit.

Founded in 2003 by PayPal founder Peter Thiel, Palantir is engaged in building and developing AI software platforms for institutions. It counts intelligence agencies such as the CIA and FBI as clients and supplies AI software to the US military, as well as the Israeli and Ukrainian militaries. It supported Ukraine, which is at war with Russia, with the defense data analysis platform 'Gotham' and is currently participating in the development of the US military's 'AI Maven'.

Palantir's competitiveness is already proven by its performance. Palantir's third-quarter sales and operating profit were $726 million and $276 million, respectively, up 30% and 68.7% from the same period a year ago, posting a 'surprise performance'. This exceeded Bloomberg's market forecast (sales of $704 million and operating profit of $236 million) by 3.1% and 16.7%, respectively.

In particular, Palantir was included in the S&P 500 in September this year, receiving evaluations that it has strengthened its stability. It also switched its stock listing from the New York Stock Exchange (NYSE) to Nasdaq last month and recently joined the Nasdaq 100 index. The Nasdaq 100 index is tracked by ETFs worth approximately $451 billion (about 647.7262 trillion won) worldwide, so its influence is significant. As a result, Palantir's stock price rose 3.92% to $76.07 on the 13th (local time), soaring 48.8% since the US presidential election on the 5th of last month. It has surged 343% this year.

Hwang Byung-jun, a researcher at Yuanta Securities, analyzed, "Palantir is a 'pure-play' AI platform company, and with the benefit of the state-led AI defense policy, the speed of external growth is accelerating, but the rate of cost increase is not large, so the operating leverage effect continues every quarter," and "With favorable macroeconomic factors like those during Trump's first term expected to join, it is the company with the most visible monetization prospects in the AI software industry."

Tesla, led by CEO Elon Musk, is considered the biggest beneficiary of Trump's second-term administration, and despite the electric vehicle chasm (temporary demand slowdown), its stock price is hitting record highs daily. Tesla's stock price closed at $436.23 on the 13th, up 4.34%. This is a 73.5% increase since the US election day.

Musk's appointment as co-head of the 'Department of Government Efficiency (DOGE)', which proposes existing federal government spending cuts and deregulation measures, is also positively received by the market. This is because the regulation on Tesla's autonomous vehicle-related business is expected to be significantly eased.

Seo Young-jae, a researcher at Daishin Securities, said, "With Trump's election, the momentum for full self-driving (FSD) and robotaxi is expected to accelerate."

Morgan Stanley also selected Tesla as the top pick in the automotive sector on the 10th. Jonas of Morgan Stanley emphasized, "Elon Musk's entry into politics has expanded investors' thoughts surrounding Tesla's fundamental outlook."

Go Jeong-sam, Hankyung.com reporter jsk@hankyung.com