Sold at Year-End, Bought Again in the New Year... Seohak Ants Reignite U.S. Stock Market Investments

2 Trillion Won in Net Purchases in Just One Week
Focus on Tesla and TSLL
Government's 'Return to Domestic Market' Policy Yet to Show Results

At the start of the new year, Korean retail investors known as "Seohak Ants" have reignited their enthusiasm for investing in the U.S. stock market. In just the first week of the year, the net purchase settlement amount for U.S. stocks surpassed 2 trillion won, quickly approaching the total purchase volume for the entire month of December last year. As the trend of selling U.S. stocks, which had emerged at the end of the year in response to government policies encouraging a "return to the domestic stock market," reversed immediately in the new year, questions are being raised about the effectiveness of these policies.

Tesla logo. Photo by Reuters and Yonhap News Agency

According to the Securities Information Portal of the Korea Securities Depository on January 10, the net purchase settlement amount for U.S. stocks from January 1 to 8 reached 1.5015 billion dollars (approximately 2.1833 trillion won). This figure is nearly equivalent to the net purchase amount for the entire month of December last year, which was 1.87385 billion dollars.

During the latter part of last month (December 22-31), investors showed a net selling trend almost every day except for the 29th, resulting in a total net sell-off of 474.76 million dollars. However, in the new year, net buying has continued on every trading day.

At the beginning of the year, buying was concentrated in specific stocks. The stock most purchased by Korean investors so far this year was Tesla (374.16 million dollars), followed by the leveraged ETF "TSLL," which tracks Tesla's share price at twice the rate (281.04 million dollars), and Micron (164.94 million dollars).

The year-end trend of selling U.S. stocks drew attention as it coincided with the government's introduction of policies encouraging a "return to the domestic stock market," citing the overseas investment boom as one of the factors behind the high exchange rate. However, based solely on the early-year trend, some analysts say there is no clear evidence of policy effectiveness.

The Ministry of Economy and Finance announced on the 24th of last month the "Domestic Investment and Foreign Exchange Stability Tax Support Plan," which includes a temporary exemption from capital gains tax (20%) on overseas stocks if investors sell overseas stocks and make long-term investments in domestic stocks. The photo shows an advertisement related to U.S. stocks at a securities firm in Seoul. Photo by Yonhap News Agency

However, as the "Return-to-Domestic Market Account (RIA)," which offers tax exemption benefits to investors who sell overseas stocks and repatriate their funds, is scheduled to be launched next month, it is expected that the real impact of the policy will only become clear after that.

Meanwhile, the domestic stock market also remains heated. The KOSPI continues to show strength, led by large-cap semiconductor stocks, with the index reaching new all-time highs. As of January 7, investor deposits reached a new record of 89.765 trillion won.

Outstanding margin loans also set a new record, reaching 27.8708 trillion won as of January 7. Cash Management Account (CMA) balances, which serve as short-term standby funds, surpassed 100 trillion won for the first time on December 23 last year and have remained above the 100 trillion won mark into the new year.