Korean retail investors who previously focused on US stocks returned to the domestic market this spring after the KOSPI index surged from 4200 to near 9000. The rally was driven by semiconductor stocks including Samsung Electronics and SK Hynix. The government launched RIA accounts offering tax benefits on overseas stock gains reinvested domestically, accelerating the shift. However, extreme volatility followed — the KOSPI triggered 49 sidecar events and 8 circuit breakers this year, leading some investors to return to US stocks in June when they net purchased $233.66 million.
Korean Investors Shift to Domestic Stocks Amid KOSPI Rally
A 45-year-old office worker identified as O, who invested exclusively in US stocks for over two years, opened a Korean stock account this spring. O previously stated he avoided the domestic market due to concerns about split listings, major shareholder risks, and foreign investor manipulation. Friends who invested in Samsung Electronics and SK Hynix shared account returns as the KOSPI approached 9000. O opened a domestic account and purchased Samsung Electronics, SK Hynix, and other stocks.
The KOSPI's rise from 4200 at the start of this year to near 9000 positioned it as the world's top-performing stock market. Korean retail investors who concentrated on US stocks began diversifying into the domestic market. The RIA account launch provided additional momentum — the account offers temporary tax benefits on overseas stock capital gains if proceeds are converted to Korean won and invested long-term in the domestic market.
Retail Investors Net Sold US Stocks in April and May
During the KOSPI's rally, funds flowed into the Korean market while overseas securities purchases declined. In April and May, when the KOSPI's upward trend was most pronounced, Korean investors net sold $469 million and $939.77 million in US stocks respectively.
While the sellers of overseas stocks and buyers of domestic stocks cannot be confirmed as identical individuals, Korean retail investors' buying activity was notably strong during the same period. Funds concentrated in semiconductor-related investments, particularly single-stock leveraged exchange-traded funds (ETFs) that track Samsung Electronics and SK Hynix returns at 2x.
KOSPI Triggered 49 Sidecars and 8 Circuit Breakers This Year
The KOSPI experienced extreme volatility despite its rally. This year, the market triggered 49 sidecar events (31 on KOSPI, 16 on KOSDAQ) and 8 circuit breakers. On the 9th, the index opened at 7486.64, up 239.85 points (3.31%) from the previous trading day, but fluctuated between declines and minor rebounds during the session before closing mixed.
Investors who returned to the Korean market faced fatigue from the volatility. Many reported falling into "24-hour investment hell" by monitoring both US and Korean markets — losing sleep tracking US market movements at night and enduring the Korean market's roller-coaster swings during the day. Stock community forums featured self-critical comments such as "I regret breaking my long-held conviction and opening a domestic account."
Retail Investors Returned to US Stocks in June
The possibility of investors returning to US stocks increased due to domestic market volatility. In June, Korean retail investors turned to net buyers of US stocks for the first time in three months, purchasing $233.66 million (361.9 billion KRW), influenced by SpaceX listing news. Future movements are being closely watched.
FAQ
What did Korean retail investors do this spring regarding stock investments?
Korean retail investors who previously focused on US stocks opened domestic brokerage accounts this spring after the KOSPI index surged from 4200 to near 9000, driven by semiconductor stock rallies in Samsung Electronics and SK Hynix.
How much did Korean investors sell in US stocks during April and May?
Korean investors net sold $469 million in US stocks in April and $939.77 million in May, the period when the KOSPI's upward trend was most pronounced.
How many sidecar and circuit breaker events occurred on the KOSPI this year?
The KOSPI triggered 49 sidecar events (31 on KOSPI, 16 on KOSDAQ) and 8 circuit breakers this year due to extreme volatility.
