While Wall Street Big Players Cut Losses... 'Seohak Ants' Go Against the Trend

Tesla's Net Purchase of 753.2 Billion KRW This Month
Apple, IonQ, Nvidia, Amazon, etc.
Continued Accumulation of Overly Declined Growth Stocks

[Asia Economy Reporter Minji Lee] While major Wall Street investors are pulling back from U.S. tech stocks, Korean overseas investors are responding with bold bargain hunting.

According to the Securities Information System and the Korea Securities Depository from the 1st to the 17th of this month, Tesla was overwhelmingly the most purchased stock by domestic overseas investors, with net buying amounting to 753.2 billion KRW. Tesla’s stock price fell from the $1,000 range to the $700 range within about a month due to the interest rate hike trend and CEO Elon Musk’s announcement of acquiring Twitter. Korean overseas investors saw this as an opportunity and jumped into buying at low prices.

Besides Tesla, most of the stocks bought in significant amounts by domestic investors were those that recently experienced sharp price declines. Among the top 1 to 15 net purchases were Apple (80 billion KRW), IonQ (47.9 billion KRW), Nvidia (29.2 billion KRW), Unity Software (25.8 billion KRW), Coupang (23 billion KRW), and Amazon (22.4 billion KRW). Their one-month stock returns were Apple -10%, Nvidia -16%, IonQ -46%, Unity Software -60%, Coupang -20%, and Amazon -24%, all plunging by double digits.

Domestic investors appear to have judged that stock prices fell excessively due to the unstable external environment and have started accumulating growth stocks. Their strategy is to buy when prices fall and take profits when they rebound, which contrasts with the moves of global major investors. In Tesla’s case, Ark Investment, led by enthusiastic supporter Cathie Wood, recently sold some Tesla shares (15,000 shares) and bought GM shares worth 7.6 billion KRW (158,000 shares). Although not a large-scale sale, the fact that the fund included another automaker for the first time instead of Tesla is seen by the market as potentially stirring concerns about Tesla’s future stock price.

There were also many negative outlooks on Apple and Amazon. Scion Asset Management, led by Michael Burry, the protagonist of the movie “The Big Short,” disclosed holding 206,000 put options (46 billion KRW) that profit when Apple’s stock price falls. This aligns with market expectations of profitability deterioration in Q2 and Q3 due to China’s lockdown policies, withdrawal from the Russian market, and increased cost burdens from inflation. Third Point, a U.S. hedge fund led by activist investor Daniel Loeb, reportedly sold most of its Amazon shares, which had been the largest holding in its portfolio. This reflects agreement with the view that big-tech e-commerce companies face margin pressure due to rising labor and transportation costs, and downward earnings pressure may persist for some time.

As concerns about U.S. major tech stocks grow, it is expected that a more defensive strategy toward growth stocks will need to continue. So-yeon Park, a researcher at Shin Young Securities, explained, “With ongoing concerns about the Fed’s big rate hikes, the discount rate on growth stocks is increasing, so high-value stocks will show sluggish performance. The earnings per share (EPS) of U.S. stocks was revised downward month-over-month for the first time in two years, with weakness seen in growth sectors such as communication and healthcare.”