Key points
- In July, Korean retail investors bought a net $4.6 billion of US stocks, their heaviest month since January, with more than 80% of it in one name, the 3x leveraged semiconductor ETF SOXL.
- Their second-biggest US buy was SK Hynix's American shares. At home, their net buying fell about 25% from June.
- July was the month the Kospi bottomed. It has since risen about 11% in a week, back to the edge of 7,000, a recovery led by foreign investors while individuals were net sellers on the biggest up days.
- In August the money kept flowing abroad, with Amazon the top US buy and SOXL out of the top five, so the domestic crowd's cash mostly didn't come back for the rebound.
The July numbers landed early this month, and they're worth sitting with. Korean retail investors, the ones the local press calls 서학개미 (suh hak geh mi), a nickname for foreign-investing Korean ants, bought a net $4.6 billion of US stocks in July. That was their heaviest month of overseas buying since January. More than 80% of it, about $3.8 billion, went into a single fund, SOXL, an ETF that moves three times the daily change of a US semiconductor index, up or down. Their next biggest buy was SK Hynix (SK하이닉스) itself, through its US-listed shares.
The timing is the part that stands out. July was the month the Kospi finally stopped falling. After being the worst-performing major market in the world this year, the index hit bottom in the last days of the month and turned. This week it rose in every session, about 11% in five days, and on Thursday it touched 7,000 for the first time since the crash before closing just under.
The people who drove that turn weren't the ones who had sent their money to New York. Foreign investors bought more than 3 trillion won ($2.1 billion) of Korean stocks on Thursday alone, their biggest day of buying in about two weeks, while individuals were net sellers into the rally. It was the same shape on July 31, the day the Kospi rose the most it ever has in a single session. Foreign money came in, and domestic retail sold.
Noh Dong-gil (노동길), an analyst at Shinhan Investment Securities (신한투자증권), tied the recovery to the market working off the leverage that had made it so violent. Noh said the peak of the volatility looks like it has already passed.
"국내 주식시장이 7월 말 이후 디레버리징에 돌입한 가운데 변동성 정점은 이미 통과한 것으로 판단된다."
In plain terms, the domestic market started shedding borrowed money after late July, and the wild swings that came with it are probably behind it.
None of this means the retail crowd gave up on Korea completely. They still net bought about 14 trillion won ($10 billion) of Korean stocks in July, most of it Samsung and SK Hynix, the same chip names foreigners were buying. But that was about a quarter less than the month before, and the heaviest, most leveraged piece of their money went to US chips instead of Korean ones.
And in August, the money going abroad hasn't turned around. In the first two weeks of the month the top US buy for Korean retail wasn't a chip name at all but Amazon, followed by SpaceX and a memory maker called SanDisk. SOXL, July's runaway favorite, dropped out of the top five. The crowd whose biggest bet was abroad has, for now, stayed there and moved on to the next batch of American names.
Meanwhile, the market they stepped back from has recovered about a quarter from its July low, though it's still well below its June peak. Whether the domestic crowd comes back to chase the rest of that recovery, or keeps sending its money across the Pacific, is the question the rest of August will answer.
Sources
- 헤럴드경제, 서학개미 역대급 순매수 해외투자 심리 더 강해졌다, on the July US buying total and the SOXL concentration
- 이투데이, 반도체 넘어 AI 클라우드로 8월 서학개미 순매수 1위 아마존, on the August shift to Amazon
- 파이낸셜뉴스, 이달 초순 개인은 코스피 상승 외국인은 하락에 베팅했다, on the buying and selling behind the rebound and the Shinhan quote
- Our earlier coverage: the day the Kospi rose almost 18%, the chip-led rally back toward 7,000
Figures are converted at about 1,419 won to the US dollar. The analyst comment is quoted in the original Korean, with an explanation in English. Source titles are in the original Korean. This is general market commentary and not investment advice.
