Korean Retail Investors Buy $2.2 Billion of US Stocks This Week, Surpassing August Total
Summary
- South Korean investors' net purchases of US stocks reached about $2.2 billion in the first week of this month, exceeding the total for all of August.
- About 74% of total net purchases of US stocks was concentrated in the triple-leveraged ETF SOXL, which bets on gains in US semiconductor stocks.
- As the won-dollar exchange rate fell to the mid-1,300 won range, the burden of buying dollar assets eased, while domestic investor deposits stood at 88.5338 trillion won, below 100 trillion won.
Forecast Trend Report by Period
Net Buying Tops August's Full-Month Total
Purchases Concentrated in 3x Semiconductor Bull ETF SOXL
South Korean investors snapped up US stocks as the domestic market tumbled. Net purchases in the first week of November alone reached about $2.2 billion, surpassing the total for all of August. Buying was concentrated in a triple-leveraged exchange-traded fund that bets on gains in US semiconductor stocks.
Data from Seibro, the securities information portal run by the Korea Securities Depository, showed South Korean investors were net buyers of $2.19753 billion of US stocks between Nov. 2 and Nov. 6, based on inquiry dates. That exceeded August's net purchases of $1.96234 billion and was more than double September's $1.00128 billion. The figure was also about 40% of last month's total, the highest in 11 months.
The most heavily bought product was Direxion Daily Semiconductor Bull 3X Shares, or SOXL. Net purchases reached $1.62525 billion during the period, accounting for about 74% of all net buying of US stocks. The fund tracks three times the daily return of the NYSE Semiconductor Index before fees.
Alphabet drew net buying of $497.05 million. Net purchases of ProShares UltraPro QQQ, or TQQQ, which tracks three times the daily return of the Nasdaq-100 Index, totaled $220.22 million.
Buying of US stocks has continued since June. South Korean investors were net sellers in April and May, unloading $468.93 million and $939.77 million, respectively, as the government rolled out policies aimed at steering money back into the domestic stock market. They turned into net buyers in June. The burden of adding dollar assets also eased as the won-dollar exchange rate, which had once risen above 1,500 won per dollar, recently fell to the mid-1,300 won range.
Over the same period, net purchases on South Korea's main Kospi market came to 4.2 trillion won. On a won basis, net purchases of US stocks were equal to about 71% of that amount.
Investor deposits, a pool of cash parked on the sidelines of the domestic stock market, have fallen below 100 trillion won. The Korea Financial Investment Association said deposits stood at 88.5338 trillion won as of Nov. 5. They have remained below 100 trillion won since dropping under that mark on Oct. 13. Margin loan balances were tallied at 28.7715 trillion won.
