As the domestic stock market experiences volatility, more Korean investors are returning to U.S. markets, but their investment returns have sharply declined. In the past two months, losses for these investors have reached 50 trillion won.
According to the Korea Securities Depository's securities information portal, Saveuro, the net purchase of U.S. stocks by Korean investors in July amounted to $4.668 billion (approximately 6.7428 trillion won), the largest since January of this year. After recording net sales in April and May, these investors resumed buying in June, pouring a total of $5.3 billion (about 7.6547 trillion won) into the U.S. stock market over the two months of June and July.
However, their investment performance has fallen short of expectations. The value of U.S. stocks held by Korean investors dropped from $204.1 billion at the end of May to $170.4 billion at the end of last month. This represents a loss of $33.7 billion (approximately 48.7 trillion won) in just two months, amounting to about 16.5% of the valuation at the end of May.
This decline exceeds the drop in the S&P 500 and Nasdaq indices during the same period, which fell by 1.88% and 6.85%, respectively.
The increase in investment losses among Korean investors can be attributed to the poor performance of their chosen stocks. The price of Tesla, the most held stock among these investors, fell by 29.1% from the end of May to the end of July. Similarly, Nvidia's stock price dropped by 7.6% during the same timeframe.
Investments in leveraged products have also contributed to the burden. The most heavily net-purchased stock by Korean investors in June and July was the SOXL ETF, which tracks the Philadelphia Semiconductor Index's daily returns at three times the rate. The net purchase amounted to $3.77486 billion (approximately 5.452 trillion won). However, the value of SOXL increased only slightly from $5.35326 billion at the end of May to $5.81145 billion at the end of last month. Despite nearly $4 billion in additional inflows, the stock price plummeted from $224.34 to $114.72.
The situation for domestic leveraged product investors is similarly grim. Citigroup Global Markets recently reported that the market capitalization of leveraged ETFs based on Korean assets peaked at approximately $52.5 billion on June 22, but has since fallen to around $19 billion. Consequently, individual investors' losses are projected to reach about $38.7 billion (approximately 56 trillion won).
* This article has been translated by AI.
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