South Korean diasporas have recently significantly increased their allocation of US equities, but money has not shifted to defense plates, but continues to pursue AI, semiconductor, and highly leveraged trading tools. Foreign sources cite data from the Korea Securities Depository Agency that Korean investors netted about $4.5 billion in United States equities in July, while the local stock market witnessed a outflow of bulk money.
The money continues to flow to the AI semiconductor.
Some $840 million of the net purchases by the Korean diaspora in July went to the US-listed ADR of SK Hercules. The securities became one of the top United States targets for net purchases by Korean investors that month.
This phenomenon has given rise to market concerns, as investors could have bought SK Hercules' shares directly in the Korean market, but instead purchased their deposit certificates through the United States market. According to Owen Lammont, Senior Vice President of Acadian Assembly Management, SK Hercules ADR recently traded at about 10 per cent higher prices than Korean local stocks, and more volatile in the US market.
In his view, such cross-market differentials were not common and might reflect a rise in speculative sentiment. A similar situation occurred during the Internet bubble in United States listed securities of selected Asian and Indian enterprises.
Leverage ETF remains the main destination.
Korean investors do not buy only large technology units. According to the data, of the top 10 US securities purchased in July, four were just leverage products, including Direxion three times more than half-conductors per day.
This suggests that the flow of funds from the Korean market to the United States market does not mean that the risk bias has declined. Some investors simply moved to the United States market to carry on with the high volatility of transactions that had previously taken place in the local market.
According to KFIA data, the South Korean stock market balance fell from about 37 trillion won at the end of June to about 27 trillion won at the beginning of August, low in the following year. Semiconductors and leverage products previously driven by the diaspora have lagged behind, and the scale of financing transactions has shrunk.
Total or limited access to US shares
Marketers believe that, although active, the impact on the overall US equity direction may be limited. Phillip Wool, research director of Raylian Global Advisors, stated that the United States stock market was still dominated by institutional investors and that Korean capital was relatively small in total.
However, concentration in a small number of highly volatile assets may still magnify local fluctuations. Lamont mentioned that Korean investors had previously concentrated on the United States Quantum Calculation Concept Unit, and that the expansion of the ETF in South Korea, Hong Kong, China, and the United States market could also further magnify price fluctuations on related plates.
Overall, this round of financial migration is more a trade-off than a change in the investment theme. After leaving the local market, the Korean diaspora continued to bet on familiar AI hardware and high-flexible assets.