South Korea’s initiatives to bring retail investors back to its domestic markets, despite offering reshoring investment accounts, incentives, and a rising Kospi, are proving ineffective against the accelerating retail rush into US stocks.
Data from the Korea Securities Depository reveals that Korean investors’ custody holdings of US equities surged to $200.4 billion by May 26. This monumental figure surpassed last year’s full-year record in just five months, representing a significant 22 percent increase since the close of 2025.
This remarkable surge is primarily attributed to a strong rally in US markets. The robust performance amplified the value of existing holdings, outpacing any sales by Korean retail investors looking to utilize tax incentives for reshoring investment accounts.
May 26 saw both the S&P 500 and Nasdaq reach new record highs, propelled by substantial gains in artificial intelligence (AI) and semiconductor shares. Notably, Micron Technology leaped 19.29 percent to $144.88, with other leading chip stocks such as Advanced Micro Devices, Intel, and Broadcom also showing strong advances. Tesla shares experienced a rise as well.
Since the pandemic, Korean retail investors’ holdings of US equities have expanded more than fivefold, escalating from approximately $37 billion to over $200 billion, even amid periods of significant market volatility.
The South Korean government’s recent drive to promote reshoring investment accounts through local brokerages, coupled with the approval of domestically listed single-stock leveraged exchange-traded funds (ETFs) linked to industry giants like Samsung Electronics and SK Hynix, underscores a wider strategy. This initiative aims to bolster the weak won and redirect substantial retail capital back into Korean markets.
Despite these efforts, retail investors’ appetite for US stocks persists robustly, compelling local brokerages to further expand their overseas trading operations.
For instance, Hanwha Investment & Securities is actively recruiting for roles in overseas equities and derivatives trading, clearly indicating a sustained demand for foreign investment services among Korean clients.
An official from the securities industry noted that overseas trading demand is expected to remain resilient, particularly as US markets continue their rally, largely fueled by AI-driven momentum.
The official further commented, “Investor interest in overseas equities is projected to consistently support trading demand into the future.”
Another industry insider pointed out that financial firms have minimal incentive to reduce their overseas retail stock operations, given the robust earnings momentum of many US companies.
“From a long-term perspective,” the official added, “investors continue to require overseas stocks for crucial portfolio diversification and rebalancing strategies.”
He also highlighted that upcoming Initial Public Offerings (IPOs) from major global companies, such as SpaceX, anticipated as early as June, could further accelerate capital outflows from Korean retail investors towards lucrative overseas markets.
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