"Blaming 'Seohak Ants': Securities Firms in Dilemma as Overseas Stock Promotions Halted"

As the government identified "Seohak Ants" (Korean retail investors trading foreign stocks) as one of the causes of the high exchange rate and even introduced tax benefits to encourage a return to the domestic stock market, the marketing competition surrounding overseas stock trading among securities firms has come to an abrupt halt. With overseas stock investment becoming a politically sensitive issue during this period of high exchange rates, securities companies are urgently readjusting their related business strategies.

According to the financial investment industry on December 25, Korea Investment & Securities recently suspended its overseas stock net deposit event, which was originally scheduled to run until March next year. This promotion offered cash rewards to clients who transferred overseas stocks held in other securities firms’ accounts to Korea Investment & Securities and traded them. The company also ended its dollar payout event, which was supposed to run until the end of this month, earlier than planned.

Korea Investment & Securities is not the only firm to abruptly halt overseas stock-related promotions. Kiwoom Securities has recently ended events such as "Start U.S. Stocks with $33" and "Three Months of Free Commission for Non-Face-to-Face Account Opening." In addition, it decided to shut down its Telegram channel "Kiwoom Securities U.S. Stock TokTok," which had about 37,000 subscribers-the largest among securities firms’ Telegram channels.

NH Investment & Securities and Samsung Securities have also suspended their overseas stock investment events, including those related to the U.S. Meritz Securities plans to end its zero commission event for U.S. stocks for new non-face-to-face account holders earlier than scheduled next month.

This is closely related to the government’s recent moves to identify Seohak Ants as a major cause of the high exchange rate and to bring back individual investors’ funds that have flowed overseas. Previously, the Financial Supervisory Service announced the "Interim Results of Overseas Investment Status Inspection" and directly pointed out that the competition among securities firms to attract overseas stock investment was excessive. Furthermore, on December 24, the Ministry of Economy and Finance announced the "Domestic Investment and Foreign Exchange Stabilization Tax Support Plan," which includes a measure to temporarily exempt Seohak Ants who return to the domestic market and invest for more than one year from the 20% capital gains tax on overseas stocks for one year. The limit is 50 million won per person.

For securities firms, the direct warning from financial authorities, combined with the government’s strengthened stance on defending the exchange rate by targeting Seohak Ants, has created an environment where it is no longer feasible to encourage overseas stock trading or continue related promotions. An official from a securities firm, who requested anonymity, said, "We are revising our marketing and business strategies," adding, "While it is true that the new year is a time for restructuring, the pressure from the authorities is a significant factor." This pressure is particularly pronounced for securities firms that have operated platforms and services focused on overseas stocks.

Dissatisfaction has also been observed among individual investors. While they welcome the tax benefits for returning to the domestic market, they question whether it is right for the government to virtually force securities firms to halt promotions and interfere with individual investment decisions. A 30-something investor, Mr. A, said, "From an investor’s perspective, buying high-growth U.S. stocks is a natural trend in the global era," adding, "The government’s current approach is reminiscent of a 'closed-door policy' that only blocks modernization." Some point out that, contrary to the intention of curbing overheated overseas stock investment, this could result in reduced access to relatively reliable overseas stock information provided by securities firms. Another investor, Mr. B, said, "With the excessive tightening of securities firms, both benefits and information have unnecessarily decreased."