Amid LG Energy Solution's Success... Are Korean Overseas Investors Turning Their Eyes Domestically?

Complex Factors Including Cash Holding Desire Lead to Decrease in Foreign Retail Investors' US Stock Holdings
Major IPOs Scheduled This Year: Hyundai Engineering, CJ Olive Young, Market Kurly, and More

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] As LG Energy Solution (LG Ensol) is creating a record-breaking sensation, the investment scale of Seohak Gaemi (Korean investors investing in U.S. stocks) in U.S. stock investments is decreasing. It is interpreted that the weak U.S. stock market and large initial public offerings (IPOs), including LG Ensol, are influencing the investment sentiment of Seohak Gaemi.

According to the Securities Information Portal SaveRO of the Korea Securities Depository on the 20th, as of the 18th, the amount of U.S. stocks held by Seohak Gaemi recorded $63.5 billion (approximately 75.6285 trillion KRW). Although the amount of U.S. stocks held rose continuously, reaching about $70.2 billion on the 3rd, about 8 trillion KRW was withdrawn from the U.S. stock market over two weeks.

Recently, although the U.S. stock market has been declining, Seohak Gaemi does not seem to view this as an opportunity for bargain buying. Last year, even during market adjustments, Seohak Gaemi actively invested in U.S. stocks. Accordingly, the amount of U.S. stocks held increased from $37.6 billion on January 1 last year to $67.8 billion on December 31.

Instead, they appear to be focusing on large domestic IPOs, including LG Ensol. During the two-day general subscription period for LG Ensol on the 18th and 19th, subscription deposits of 114.1066 trillion KRW poured in. The number of subscription applications also reached 4,424,470, setting a record for the highest number since the ban on duplicate subscriptions. Additionally, Hyundai Engineering is scheduled to be listed in February, and CJ Olive Young and Market Kurly are also preparing for listings.

Attention is also focused on whether LG Ensol’s listing performance will further attract the interest of Seohak Gaemi. When the electric vehicle company Rivian was listed on the U.S. stock market in November last year and gained popularity, individual investors flocked to the U.S. stock market. In November last year alone, Seohak Gaemi net purchased $260.26 million worth of Rivian, ranking third in net purchases among U.S. stocks, surpassing Meta (Facebook) and Microsoft.

This also increased the overall investment scale of Seohak Gaemi. The amount of U.S. stocks held rose from $63.1 billion on October 31 last year to $67.7 billion on November 30. This means that more than 5 trillion KRW worth of U.S. stocks were additionally purchased within a month.

Hwang Se-woon, a research fellow at the Korea Capital Market Institute, explained, “Individual investors, including Seohak Gaemi, have been responding sensitively to specific issues,” adding, “The recent weakness in both domestic and international stock markets and the increased desire to hold cash have also played a complex role.”