Global Stock Markets Wobble... Retail Investors Bet on US Treasuries, Yen, and Inverse ETFs

Tariff-Induced 'Black Monday'... Investors Seek Safe Havens

Over $4 Trillion Net Purchase of US Treasuries in Q1

Record High on a Quarterly Basis

ETFs like RISE US 30-Year Treasury are Popular

Yen Strengthens on BOJ Rate Hike Prospects

US Treasury ETFs Exposed to Yen Also Popular

'Betting on Decline' Inverse ETFs in Focus

Top 10 Returns in the Last 2 Weeks

'Find a Safe Haven Asset!'

Investors are moving to financial products that can avoid the shock of the 'tariff war' between the US and China. The net purchase volume of US Treasuries reached a record high in the first quarter of this year, and interest in products investing in Japanese yen and inverse ETFs is also growing.

◇ US Bond Holdings Swell to $21 Trillion

According to the Korea Securities Depository on the 7th, the net purchase amount of US Treasuries by domestic investors in the first quarter of this year amounted to $2.79016 billion (about 4 trillion won). This is the highest on a quarterly basis since related statistics were compiled in 2011. The holdings of US bonds by domestic investors have more than doubled to $14.72463 billion (about 21 trillion won) compared to $6.53384 billion a year ago.

Experts analyze that the increased uncertainty in global stock markets is leading to a preference for US Treasuries. They say the global tariff war triggered by US President Donald Trump is heightening concerns about a global economic downturn, increasing the preference for safe assets like bonds. Kwon Jeong-hoon, Chief Investment Officer (CIO) at Hana Asset Management, explained, "The more concerns about a global economic downturn grow, the higher the possibility that the US will further lower its base interest rate," adding, "US Treasury prices, which move inversely to market interest rates, could rise further."

Since the beginning of this year, US long-term bond yields have been steadily declining (bond prices rising). After hitting 5.005% intraday on January 14, it has now fallen to 4.325%. Thanks to this, the price of ETFs investing in US Treasuries is on the rise. 'RISE US 30-Year Treasury Active' rose 3.86% on this day and 14.11% this year. In contrast, 'RISE US S&P 500', which invests in the US stock market, fell 18.55% during the same period.

◇ Yen Arbitrage Product Returns Increase

US long-term bond ETFs exposed to yen, which allow investors to gain arbitrage from the rise in the value of the Japanese yen, are showing double-digit returns this year. 'ACE US 30-Year Treasury Yen Exposure Active (H)' rose 15.48% compared to the beginning of the year. This is the highest return among domestic listed bond ETFs during this period. 'RISE US 30-Year Treasury Yen Exposure (Synthetic H)' also rose 15.18% during the same period.

These two ETFs are products that invest in US long-term bonds in Japanese yen. They reflect changes in the value of the yen against the won and hedge against dollar exchange rate fluctuations. As the value of the yen rises and US long-term bond yields fall, investors can gain both arbitrage and long-term bond capital gains.

Recently, the rise in the value of the yen, a safe asset, has led to improved returns. The value of the yen broke through the 1,010 won per 100 yen level during the day, reaching its highest level in three years. TIGER Japan Yen Futures have risen 7.87% this year.

Ebrahim Rahbari, a strategist at Absolute Strategy Research, evaluated, "The yen is still undervalued, and if the US lowers its base interest rate, its value will rise further," adding, "It is an attractive investment destination in the tariff war."

The Bank of Japan (BOJ) hinting at the possibility of additional rate hikes is also a major factor in the yen's strength. Although the BOJ ended its negative interest rate policy in March last year and raised rates three times, it is under pressure for additional hikes as last month's consumer price index growth rate remains high at 4%. Shinichi Uchida, Deputy Governor of the BOJ, stated on the 4th, "If core inflation rises based on continuous economic improvement, we will raise the base interest rate."

◇ "Inverse ETFs, Caution for Long-Term Investment"

Interest in inverse ETFs, which bet on index or stock price declines, has increased significantly.

According to the Korea Exchange, the top 10 ETFs with the highest returns in the last two weeks (March 24 to April 4) are all inverse products. 'RISE US Semiconductor Inverse (Synthetic H)' had the highest return at 18.31%, followed by 'RISE 200 Futures Inverse 2X' (15.50%), and 'KIWOOM 200 Futures Inverse 2X' (14.25%). Demand has surged for short-term profits by investing in the decline of US tech stocks, which have been embroiled in overvaluation controversies since last year, or the KOSPI index hit by tariff impacts.

Experts advise that inverse products should be used as a means of short-term risk avoidance. Seol Tae-hyun, a researcher at DB Securities, said, "Inverse ETFs track daily returns in the opposite direction, so holding them long-term can lead to distorted returns, so caution is needed."

Choi Man-soo/Maeng Jin-kyu/Yang Ji-yoon, reporters bebop@hankyung.com