Korean Investors Flock to U.S. Tech Stocks as Domestic Market Lags Behind
1min read Korean retail investors have increasingly turned their attention to the U.S. stock market, with their total holdings exceeding a remarkable $100 billion for the first time. This growth is attributed primarily to their substantial investments in major technology stocks, particularly Tesla. As of last week, the total value of Tesla shares held by Korean retail investors reached $16.7 billion, marking it as their most favored stock. Alongside Tesla, these investors also hold significant stakes in other tech giants, with $13.8 billion in Nvidia, $4.6 billion in Apple, and $3.6 billion in Microsoft.
The primary driver behind this surge in U.S. stock investments is the search for higher returns amid unsatisfactory performance in the domestic market. The S&P 500 Index's impressive 26.41% gain this year starkly contrasts with the 5.17% decline in Korea's Kospi Index, one of the weakest performers globally. Despite Korean authorities' attempts to rejuvenate local stocks through enhanced corporate practices, domestic investors have offloaded Kospi shares worth $3.2 billion this year.
Additionally, the volatile yet potentially lucrative sectors of cryptocurrencies and technology stocks have become increasingly attractive to Korean retail investors. This trend indicates a shift towards more aggressive investment strategies, focusing on high-risk, high-reward opportunities. Furthermore, Korean investors have shown a keen interest in leveraged ETFs that track U.S. tech stocks, leading to surges in demand for these financial instruments.
The enthusiasm for American equities is also reflected in the popularity of specific leveraged ETFs among Korean investors, including those that offer triple leverage on the Nasdaq 100 Index and U.S. semiconductor stocks. This preference underscores the broader movement towards diversifying investment portfolios beyond the Korean market, as investors seek to capitalize on the growth potential of the U.S. technology sector.