Depository Holdings of US Stocks at $62.4 Billion... Caution Needed for US System Differences

It has been revealed that U.S. stocks held and managed by the Korea Securities Depository (KSD) account for 88% of all foreign currency stocks.

According to the KSD on the 14th, U.S. stocks held and managed by the KSD amounted to $62.4 billion (approximately 82.5 trillion KRW) as of the end of the third quarter this year, representing 88% of all foreign currency stocks and 65% of all foreign currency securities.

The KSD explained, "Since 2020, Korean nationals' investments in foreign currency securities have steadily increased, with particular interest in the U.S. stock market. Although investment amounts declined due to the global stock market downturn caused by continuous base rate hikes and geopolitical issues, they have recently recovered to previous peak levels."

Since the operational system of the U.S. stock market, which has the largest investment proportion, differs structurally from that of Korea, domestic investors need to exercise special caution.

Unlike Korea, which strictly manages the settlement cycle (trade date + 2), the U.S. stock market experiences settlement delays more frequently than in Korea. Therefore, investors should be aware that the settlement of U.S. stock purchases and sales may take longer than the settlement cycle, contrary to domestic expectations.

Additionally, the U.S. stock market does not have upper and lower price limits, so sudden large price fluctuations due to various market variables can occur. Especially due to the time difference with the U.S., domestic investors may face difficulties in obtaining timely local information and responding promptly.

The U.S. stock market also lists securities of non-U.S. companies, and unexpected events such as trading restrictions due to economic sanctions may occur. Furthermore, there are systems different from the domestic market, such as delisting procedures based on price trends.

Unlike Korea, which applies a uniform dividend income tax rate of 15.4%, the U.S. stock market may impose high or additional taxes depending on the type of individual securities.

The types of rights exercises are more diverse than in Korea, and even for the same type, changes in exercise conditions and periods tend to occur more frequently than domestically. If investors fail to fully recognize changes in rights exercise information such as conditions and periods, there is a possibility of losses, so caution is required.

Unlike domestic securities, where delays in dividend payments rarely occur, foreign currency securities including U.S. stocks have relatively higher frequencies of delays in stock and cash payments and reissuance due to correction payments.

A KSD official urged, "Investors need to conduct thorough information searches and make careful investment decisions regarding the different trading environments and risks related to international affairs compared to domestic markets."