Retail investors expand US equity holdings despite weakening won

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Sung Won-ho, 34, an office worker in Seoul, said he will continue to increase holdings in U.S. artificial intelligence (AI) shares.

“I know the Korean currency is weak, but I can’t miss out on the AI rally,” he said. “It costs me a bit more, sure — but that is a cost I’m willing to pay, since every day I hesitate, the more the stocks would inch up. Shares of Alphabet and Nvidia continue to climb after moderate corrections. Me waiting for the won to gain against the U.S. dollar costs me more, with my psychological and mental health factored in.”

The equity market volatility is a factor he can’t brush off, but he strongly believes the U.S. market has growth momentum compared to the Korean market.

“I want returns, and the U.S. market is where I know I can get it from,” Sung said.

He is one of many retail investors increasingly turning to the U.S. stock market despite the won-to-dollar exchange rate weakening to the 1,470 range.

According to data from the Korea Securities Depository, Koreans net bought $5.93 billion in U.S. stocks in November.

The monthly figure is slightly below October’s $6.85 billion, but is still backed by dollar demands from retail investors.

Alphabet, the parent firm of Google, was the top pick for Korean retail investors last month, with net purchases of over $1 billion, accounting for 18 percent of all offshore net purchases.

Alphabet’s AI semiconductor has recently attracted investors as a potential strong competitor to Nvidia, further fueled by reports of Warren Buffett’s large stake purchase.

The second-most popular choice was the Direxion Semiconductor 3X Leveraged exchange traded fund (ETF), followed by Nvidia and Meta.

The popularity is explained by tangible performance.

Alphabet posted over 43 percent return over the past three months, while the semiconductor ETF surged over 73 percent over the same period.

Meanwhile, the Financial Supervisory Service earlier in the day began a probe into Korea Investment & Securities and NH Investment & Securities over investor protection and risk management, as part of broader compliance issues.

This is widely seen as a move to see if brokerages have been overpromoting retail overseas investment, driving the sustained weakness of the Korean currency over the past few months.