Foreign Retail Investors' 'Big Tech and ETF Shopping' in September

As Stock Market Volatility Increases, Focused Investment on Major Stocks Like Apple, MS, and Alphabet

[Asia Economy Reporter Park Jihwan] Seohak Gaemi (domestic investors investing in overseas stocks) have been concentrating their investments on big tech companies and exchange-traded funds (ETFs) since the beginning of this month. In particular, around the Chuseok holiday, they have been aggressively buying ETFs related to Chinese companies.

According to the Korea Securities Depository on the 28th, the overseas stock item most purchased by domestic investors this month (September 1-27) was the 'ProShares UltraPro QQQ ETF.' The net purchase amount during this period reached $193.03 million (227.6 billion KRW). This fund diversifies investments in large U.S. tech stocks. It holds high proportions of Apple, Microsoft, Amazon, Facebook, Tesla, and Alphabet.

ETFs also occupied the 4th to 6th places, filling four out of the top ten net purchase items by Seohak Gaemi. This is a significant increase from two ETFs in the first half of the year. The 4th largest net purchase by Seohak Gaemi was the 'S&P 500 ETF,' with a total net purchase amount of $88.21 million (104.1 billion KRW). This product also invests in large tech stocks such as Apple, Microsoft, Amazon, Facebook, and Alphabet. Additionally, the 'Invesco QQQ Trust SRS1 ETF,' which invests in the top 100 Nasdaq blue-chip stocks, attracted $78.54 million (92.7 billion KRW), and the 'Hang Seng China Enterprises Index ETF,' linked to the Hong Kong H Index (Hang Seng China Enterprises Index), saw buying of $76.15 million (89.8 billion KRW).

Among individual stocks, large big tech stocks such as Alphabet and Microsoft ranked 2nd and 3rd in net purchases. Seohak Gaemi bought $109.47 million (129.1 billion KRW) worth of Alphabet and $93.98 million (110.8 billion KRW) worth of Microsoft this month. Major big tech stocks like Apple ($54 million, 63.8 billion KRW) and Facebook ($42.52 million, 50.2 billion KRW) also ranked high in net purchases.

The preference of Seohak Gaemi for ETFs and big tech companies appears to be a result of investment focused on reducing risk. As market volatility increased recently due to the imminent tapering (reduction of quantitative easing) by the U.S. Federal Reserve and the bankruptcy crisis of China's Evergrande Group, investors chose the most reliable representative stocks and diversified investment methods to reduce risk. Lee Hyoseok, a researcher at SK Securities, stated, "Purchasing big tech companies should be seen as securing safe assets that will not fail in the future," and added, "In the case of ETFs, it seems to be a method of diversified investment chosen amid the spreading volatility."

Since the Chuseok holiday, Seohak Gaemi's buying spree has concentrated on China-related ETFs over the past ten days. As the Evergrande Group issue caused sharp declines in the Chinese and Hong Kong stock markets, it is interpreted as viewing this as a buying opportunity at low prices. Since the 18th, two China-related ETFs ranked among the top ten net purchase overseas stocks by domestic investors. The Hang Seng China Enterprises Index ETF ($76.12 million, 90 billion KRW) and the Global X China Electric Vehicle & Battery ETF ($17.64 million, 20.8 billion KRW) ranked 2nd and 9th in net purchases, respectively.