Korean retail investors purchased a net $2.97545 billion in US stocks from the 1st to 22nd of this month, marking the largest net purchase in five months. The surge followed a decline in the won-dollar exchange rate from 1555.8 won on the 2nd to 1466.8 won as of 3:30 PM on the 23rd, and increased volatility in the KOSPI index. Funds concentrated heavily in leveraged exchange-traded funds (ETFs), with the 3x leveraged semiconductor ETF SOXL accounting for approximately 77% of total net purchases at $2.28774 billion. Korean financial authorities recently tightened regulations on domestic single-stock leveraged ETFs by raising margin requirements.
Korean Investors Record $2.97 Billion Net Purchase in US Stocks
According to Korea Securities Depository on the 23rd, Korean investors' net purchase of US stocks from the 1st to 22nd of this month totaled $2.97545 billion (approximately 4.4 trillion won), the largest amount since February. Buying activity dominated on all but three trading days during this period. US stock investment had shifted to net selling in April and May due to a surge in the KOSPI and the launch of the Return to Domestic Market Account (RIA), but returned to net buying last month.
Won-Dollar Exchange Rate Falls from 1555.8 to 1466.8 Won
The won-dollar exchange rate, which peaked at 1555.8 won on the 2nd — the highest level since the 2009 financial crisis — fell to 1466.8 won as of 3:30 PM on the 23rd. The decline reduced the cost of purchasing US stocks for Korean investors. Increased volatility in the KOSPI index also contributed to the shift toward US markets.
SOXL Accounts for 77% of Total Net Purchases
The most purchased security was SOXL, a 3x leveraged ETF tracking the US semiconductor index, with net purchases of $2.28774 billion (approximately 3.4 trillion won) — about 77% of total net purchases for the month. SK Hynix American Depositary Receipts (ADR), which listed on Nasdaq on the 10th, ranked second with $615.91 million (approximately 900 billion won). KORU, a 3x leveraged ETF tracking Korean stock returns, ranked third with $224.2 million.
QLD, a 2x leveraged Nasdaq 100 ETF, and TQQQ, a 3x leveraged Nasdaq 100 ETF, ranked fourth and fifth respectively in net purchases. Last month, individual technology stocks and thematic products such as SpaceX, Micron, Roundhill Memory ETF, and Marvell Technology occupied top positions, but this month the focus shifted to leveraged products.
Korean Authorities Raise Margin Requirements for Leveraged ETFs
Korean financial authorities recently raised the base deposit requirements for domestic single-stock leveraged ETFs. An asset management company official stated that the regulatory tightening may have created a "balloon effect," with investors moving to US markets where restrictions are less stringent. The official noted that "allowing the market's autonomous adjustment function to operate may be preferable to excessive intervention."
FAQ
What did Korean investors purchase in US stocks from the 1st to 22nd of this month?
Korean investors purchased a net $2.97545 billion in US stocks from the 1st to 22nd of this month, the largest net purchase in five months. The 3x leveraged semiconductor ETF SOXL accounted for approximately 77% of total net purchases at $2.28774 billion.
Why did the won-dollar exchange rate fall from the 2nd to the 23rd?
The won-dollar exchange rate fell from 1555.8 won on the 2nd — the highest level since the 2009 financial crisis — to 1466.8 won as of 3:30 PM on the 23rd, reducing the cost of purchasing US stocks for Korean investors.
What regulatory changes did Korean authorities implement for leveraged ETFs?
Korean financial authorities recently raised the base deposit requirements for domestic single-stock leveraged ETFs, prompting some investors to shift toward US markets where such restrictions are less stringent.
